Indian rupee ended the start of the week with falling to 39.41 against the U.S. dollar making it the first rupee’s bearish close after two days of growth. The rupee sellout was caused by the rumor of the Reserve Bank of India intervention in the country’s Forex market.
It wasn’t the first time for Indian central bank to intervene the currency market with big amounts of rupees to prevent its fast appreciation against the dollar. Central banking institution of India already committed a rupee intervention recently – on November 24. With the increasing interest in the Indian stock markets from the side of the international investors, Indian currency is affected by a very high demand by foreigners. But too fast appreciation of national currency leads to the higher prices on exported goods and services, which definitely hurts Indian economy.
There is nothing strange in the fact that monetary authorities of Indian try every mean that they can use to prevent rupee’s uncontrolled growth. But despite this fact INR remains a very attractive currency, which is doomed to face the increasing demand, so in a long-term it may be a very good investment.
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