Cheaper oil, foreign flows a tailwind for rupee

MUMBAI: India’s rupee, among Asia’s worst performing currencies this year, could be the fastest in the region to rally as the world restarts economic activities after the coronavirus pandemic, oil prices weaken and the US dollar eases broadly, analysts said.
The partially convertible Indian rupee has lost nearly 7% against the dollar so far this year, despite heavy dollar supplying intervention by the central bank. It hit a life low of 76.92 to the dollar on Wednesday.
But a turnaround could be swift because of the collapse in the price of oil, which is a major import for the country, and the return of foreign investment into rupee stocks and bonds.
The crash in oil prices to 18-year lows is in particular a tailwind for the rupee and could even return the country’s current account balance to a surplus for the first time in 15 years, economists said.
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