The Indian Rupee on Monday strengthened the most as compared to other major Asian currencies. It has hit an eight-and-a-half month high of 68.53 a dollar and has reached almost the same levels as that in the year 2012-13.
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As per a report in Business Standard, Ritesh Bhansali, vice-president, Mecklai Financial said, “Rupee is appreciating because of strong portfolio inflow in March. Globally, stock markets are rallying too, and there is a feeling that Modi is going to form the government again after the Pulwama incident. That indicates political stability.”
As on date in March, the portfolio flow in equity has been over $3 billion. In debt also, the flow has been of more than $800 million. In fact, the Reserve bank of India’s proposal to swap $5 billion with banks has also been viewed positively by the markets.
The Rupee gained 0.823 percent against the dollar in intra-day trade on Monday, the steepest gain in the region. Moreover, year-to-date, the rupee has gained a remarkable 1.8 percent.
The month of March has witnessed the most robust Rupee performance since 2nd January 2019. According to reports, it’s the Modi appeal and the prospect of him coming back to power for a second term in the coming general elections which has resulted in an upward trend in the foreign inflows into Indian stock markets.
However, one of the other reason why the Rupee is appreciating against the Dollar is that the RBI has minimised its intervention in the currency markets.
Moreover, because the election results have a direct impact on share market performances in India since the opinion polls have shown increased prospect of NDA coming back to power, the Stock market has also been seeing a continuous upsurge.
Historically, though the India Sensex Stock Market Index reached an all-time high of 38896.63 in August of 2018, March 2019 has seen a continuous upward trend.
It was earlier reported that as per the latest tracker poll conducted by Times Now and VMR, Prime Minister Narendra Modi’s popularity among the electorate jumped seven percent in the aftermath of the Pulwama attack.
Meanwhile, the surging popularity of Modi led NDA government could also be seen as three opinion polls, published on March 11th, rejecting all previous predictions of a hung parliament, envisioned a clear majority of the NDA in the upcoming general elections.