Rupee Benefits From Period Of Comparative Stability

The rupee is stronger today thanks to positive risk sentiment in Asia and positive grumblings around the coronavirus situation. There were 43,654 cases yesterday, down from a peak of over 400k in May. Health officials said late yesterday India will meet its target of supplying more than half a billion COVID-19 vaccine doses to states by the end of this month, but added that not all doses may be administered by then.

• INR has stayed relatively stable despite domestic conditions, Commerzbank says: "The Indian rupee has been rather stable in the past few weeks between the 74-75 range and this should be a welcome sight for RBI. This is impressive because of two reasons. One, it has held up reasonably well despite the weakness in other Asian currencies due to the spike in Covid cases. Second, volatility has calmed down after the roller-coaster ride between April to June where it gyrated between the 72.20 to 75.60 range. Pro-active RBI support and a stabilization in the Covid situation helped INR to find a firmer footing. IMF has been rather erratic on its forecast for India in the past year due to the pandemic with massive upgrades and downgrades. In the latest update, it downgraded India's outlook for the current fiscal year 2021-2022 by 3%-points to 9.5% and this brings it in line with our own forecast for this year. RBI meets next week and will give its latest assessment on the economy but on the currency, it is likely to welcome the stability."