Rupee, worst emerging Asia currency of 2022, likely to fall further

Economy and Finance

Rupee, worst emerging Asia currency of 2022, likely to fall further

06 Jan 2023 Zinkpot 144

Business Standard - The Indian rupee, emerging Asia’s worst performer in 2022, is likely to extend losses in the next fiscal year, according to a top private bank in the country.“A substantially wider current account deficit” in the next fiscal year will keep the rupee under pressure, Neeraj Gambhir, group executive for treasury, markets and wholesale banking at Axis Bank Ltd., said in a Bloomberg TV interview. Read more

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Indian rupee emerged as Asia's worst performing currency in 2022, depreciating around 11.5% against the US dollar on strength in the greenback and capital outflows by foreign investors.
Dollar has strengthened amid Russia-Ukraine conflict, global slowdown and global inflation concerns, which led to surge in the US bond yields, thus leading to appreciating U.S. dollar.
Rupee is expected to depreciate against the US dollar in H1 2023 due to many reasons - the global inflation and economic concerns continue to dent risk sentiments, supply chain disruptions and food inflations are also expected to extend from 2022 to 2023.
Russia Ukraine conflict has failed to reach any solutions and any possibilities of a truce look rather remote in foreseeable future. Resurgence of COVID-19 may also plague the markets.
Although outlook for Indian currency looks weak in the near-term, it isn't expected that this sharp downside will be extending for a prolonged period as India is expected to remain as the best performing major economy which may be supportive for Rupee at lower levels. India's GDP is forecasted to expand by 6.8% in 2023.