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India expected to be preferred pick among EMs despite rupee slide

Mohit Ralhan of TIW Private Equity said once the general elections in 2019 are over and a stable government is in place till 2024, the depreciation in INR against US dollar should come back to its structural and gradual rate.

September 14, 2018 / 12:29 PM IST

Mohit RalhanTIW Private Equity

The Indian rupee has hit a new low and the unabated slide has scared market participants and policymakers alike. But this is not the first time though. Something similar had occurred in 2013 as well when the Indian rupee had fallen from around 54/$ in April 2013 to 68/$ in August 2013.

In 2013, the financial markets had got spooked by the “tapering” announcement of US Fed. The price of Indian basket of crude oil was extremely high at above $100 per barrel. In addition, the growth was sluggish, and the inflation was also high at above 9 percent.

Fast forward to 2018 and the hawkish monetary policy stance by the US Fed is still the major reason leading to capital flight, especially from the Indian bond market. FPIs have pulled out about Rs 48,000 crore from India in the first half of 2018 and about 85 percent of that was pulled out from debt markets. This is the largest outflow in the last 10 years.