Modi effect: Rupee best performing Asia-Pacific currency

May 25, 2014 12:30

Boosted by capital inflows and euphoria around the incoming government, rupee's surge to 11-month high levels has made it the best performing currency in Asia-Pacific region against the US dollar so far in 2014.

With a gain of about 5.3 per cent since the start of this year, rupee has sprinted ahead of its other Asia-Pacific peers, including Indonesia's rupiah and New Zealand dollar, in terms of year-to-date rise, shows an analysis of various currencies vis-a-vis the Greenback.

The rupee, which closed at 58.52 levels against the US dollar on the last trading day on Friday, has incidentally seen a lion's share of 5.3 per cent gain in the past one month.

The Indian currency stood at Rs 61.8 level per US dollar at the start of 2014 and has recorded a gain of 327 paise in less than six months, partly helped by robust foreign fund inflows. This marks a major turnaround since August last year when rupee touched its life-time low of 68.80.

"...positive sentiments out of the election results enabled us to upgrade our FII flows estimates by USD 5 billion to USD 20 billion, implying an overall BOP (balance of payment) surplus of USD 29 billion. We expect the USD/INR range to be 57-61 in FY2015," said Indranil Pan, Chief Economist of Kotak Mahindra Bank, in a report.

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