Rupee Remains Resilient Amid Uncertainty Over US Elections

Even amid the uncertainty surrounded around the US Presidential elections, the Indian rupee has remained best among emerging market bets. This is buoyed by Reserve Bank Of India’s (RBI) preparedness in defending the currency with the world's fourth-largest foreign exchange reserves.

Notably, the Reserve Bank of India’s abundant level of foreign exchange reserves has been instrumental in keeping the rupee under control. This makes the currency less vulnerable to US election-related swings. Among its peers, rupee is less susceptible to changes in US tariff policies given India’s domestic-oriented economy, MUFG Bank said.

Michael Wan, senior currency analyst at MUFG Bank said, “The RBI remains strongly in the market to cap FX volatility and FX reserves are more than adequate.” He added, “macro stability remains quite strong, with a manageable current account deficit of slightly more than 1 percent of GDP and gradually moderating inflation pressures.”

RBI governor Shaktikanta Das has stressed the importance of building foreign exchange reserves. This will help to shield the economy from volatility. When the currency depreciated, especially around the 84 to a dollar mark, Das never hesitated from using the reserve pile.

According to Bloomberg, RBI sold $10.8 billion in the three weeks till Oct. 25 to balance the rupee. On Monday, the rupee hit its record-low 84.1087 amid prolonged outflows from domestic equities.