New Delhi August 2 2024: After a strong first half of the year where it beat emerging market Asian currency peers versus the dollar, the Indian rupee has now become the second worst performer this quarter, just ahead of the Taiwan dollar.
This shift coincides with a weakening dollar as market expectations of interest rate cuts in the US increase. The RBI’s policy of smoothening currency swings by adding to or dipping into record high foreign reserves has played a key role. This strategy makes the rupee outperform when the dollar is strong against regional peers, but it lags when the dollar is on the backfoot.
