Indian Rupee General Info
The Indian rupee gets its name from the rupiya – a silver coin first produced in the sixteenth century.
Rupee trades make up around 1% of the total volume of the foreign exchange market. This market share is comparable to currencies from other major emerging market economies, such as South Africa, Brazil and Russia, but falls some way short of the 4% share taken by the Chinese yuan – the most actively traded emerging market currency.
Importantly, the rupee has strong seasonal characteristics. The currency typically falls in value every second-quarter (April-to-June) due to India’s heightened gold demand heading into the Hindu festival of Akshaya Tritiya. Heavy rains between June and September can also depress industrial production in the country and weaken exports, which weigh on the currency.
The rupee’s all-time low against the US dollar came in February 2016 when USD/INR reached 68.80 (INR/USD 0.0145). Its all-time high came in March 1973 when USD/INR traded at just 7.19 (INR/USD 0.139). More recently, since 2007, the rupee was at its strongest in November 2007 when USD/INR fell to 39.10 (INR/USD 0.0256).
INR - Market View
Throughout August and into early September, the rupee was straddling the 64.0 level against the US dollar and volatility had dried up. The rupee was nonetheless strong and wasn’t far from its 2017 high at 63.53 (a USD/INR low).
The rupee had done well not to decline significantly in the face of negative seasonal factors and the Reserve Bank of India’s decision to cut interest rates in August in the wake of data which showed inflation falling to a five-year low of 1.54% (the bank’s inflation target is 4%).
Despite a 2017 gain against the US dollar of almost 6%, the rupee remains close to long-term lows against several of the other majors, most notably the euro, against which it was trading in September at 76.3, and the Canadian dollar, against which it traded at 52.55.
Another interesting rupee exchange rate is AUD/INR, which in four separate weeks in July and August failed to breach the major resistance at 51.80-52.0. The 52.0 level has been a major factor in this exchange rate for several years.