Indian Rupee appreciates in forex market.

News and Reviews exclusive: Suddenly INR is looking stronger again. Why? Difficult to find a quick answer as the trend of INR appreciation is still not set. Clealy, the Reserve Bank of India`s (RBI) reference rate for the rupee appreciated 2.96% against US dollar to 47.18 on November 5, as compared to that of the previous working day`s 48.62 (November 3). Is it due to Demand and Supply force where Indians have reduced the need for USD? Or is it that Mr Obama (Democrat) has become the 44th President Elect for United States? Not really, so what is the true story?Click to read on …

We believe that INR Currency Movements is always a function of 3 reasons i.e.

a) Interest Rate (Higher Interest rates means weaker INR)
b) Demand and Supply (Export Vs Imports - Higher Export BOP means stronger INR)
c) Investment Grade (Higher GDP means stronger INR)

So, what really has changed in last week which promted INR to get relatively stronger vis-a-vis USD. Actually nothing excpet RBI cut of CRR & SLR for Banks. So, may be it is just speculation or may be we have started getting FII flows (Hot Money - mostly speculative) back in the country.

Meanwhile, rupee appreciated 0.67% to 60.89 against the Euro on November 5, as compared to 61.30 on November 3.

As illustrated in the table below, the rupee appreciated 2.16% versus the Great Britain Pound at 75.06 as against 76.72 on the previous working day, while it appreciated 3.78% versus 100 Japanese Yen at 47.31, as against 49.17 on the previous working day.

Whay ever the case may be, we expect INR to hover around Rs 45 Per US Dollar. If we have strong economy in 2009 with a new Pro Business, the INR may get stronger. Rs 35 for Dollor shall not be a suprise, if India is clocking GDP @ 10% Y-O-Y for 3 consecutive yrs and Inflation not more than 6%.