After news that the fastest growing economy in the world sends in history its big bills to combat corruption, the local currency now faces a new problem. Indian rupee sank to 7-week low after speculation that the Federal Reserve will raise interest rates after election of the new president of the United States Donald Trump. This raises concern about the level of outflows from Indian assets.
The Indian rupee lost 0.5%, reaching 66.9750 INR per USD. Earlier currency in the Asian country has dwindled to 67.1050 INR per USD, which noted its lowest level since late September. The emerging markets expect higher US interest rates and investors react to this opinion.
Investors have shown some concern about how the victory of Donald Trump will affect the relations between USA and India, as the main concerns are related to issues of trade and immigration.
The foreign funds have sold a net 306.1 million USD of Indian shares on Wednesday, which is the largest amount in a single day since August 2015. This seriously affected the local currency. The US dollar outflows on account of selling by foreign institutional investors (FIIs/FPIs), high demand by importers and possibility of interest rate by the US Fed caused the dollar to appreciate significantly against the rupee.
The government is expected to publish factory output (IIP) figures, while the Reserve Bank of India (RBI) will be releasing the weekly foreign exchange data statistics in the evening.
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