By Bilal Hafeez 06-08-2020
In: hive-exclusives | Emerging Markets FX

Indian Rupee Weakness Expected

(2 min read)
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USD/INR has struggled to break below 74.50 over the past month even as the dollar (DXY) has weakened. This reflects a broader dynamic in FX markets, where dollar weakness is less pronounced in EM markets. Indeed, other similarly yielding EM currencies, such as the South African rand (ZAR) and Mexican peso (MXN), have recently suffered from notable bouts of weakness (Chart 1). Moreover, INR seasonality shows that August tends to see rupee weakness, with EM FX generally faring poorly during the month – the 2015 CNY devaluation and 2018 TRY sell-off are examples of volatile events occurring in August (Chart 2). INR/USD futures could therefore see a return to the 132 level or lower in coming weeks.

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