As of last week, the Indian rupee is the only emerging market’s currency to have appreciated in the past year against the dollar, despite the dollar index hitting new highs every day in anticipation of a Fed rate hike. This can be attributed to the inherent strength of the Indian economy, supported by steady reforms brought in by the BJP (Bharatiya Janata Party) government and strong FDI (Foreign Direct Investment) inflows. With key global rating agencies approving the reforms agenda of the government, the rupee will most likely outperform its peers when the Fed eventually hikes rates. This will prevent FDI outflows from India and will support the currency and markets. There is a case building up for India to delink itself from other major economies.
by Nilesh P.