Indian Rupee, Asia’s worst-performing currency, took just five weeks to convert itself into Asia’s best performing currency. Higher chances of PM Modi returning to power for a second sting after the Lok Sabha elections have propelled the Indian rupee. Gao Qi, a currency strategist at Scotiabank in Singapore, expects the INR currency to rally to 67 per dollar by June-end. Foreign investors have also invested a net $3.3 billion in equities till March 18 this year.
On March 13, the RBI introduced a new liquidity management tool in the form of dollar-rupee swap to inject rupee liquidity. At the auction to be held on March 26, RBI will buy dollars worth $5 billion from market participants at a market-determined premium and inject rupee liquidity amounting to Rs 35,000 crore into the Indian banking system. The tenure of the swap has been fixed at three years. Once the auction window is closed, all the bids would be arranged in descending order of the swap premium quoted. The move is expected to benefit corporate borrowers.