Rupee is the weakest currency in Asia, despite the weakness in the dollar, this is the biggest reason for the decline

News Topical, Digital Desk : The Indian rupee has remained one of the weakest currencies in Asia this quarter. Analysts believe that it may continue to underperform against other Asian currencies in the future. The Reserve Bank of India (RBI) is trying to prevent its foreign exchange reserves from getting exhausted. According to RBI, it has to repay about $73 billion dollars as net short position by April. This figure was a record $88.8 billion in February.

IDFC First Bank believes that RBI may be forced to buy dollars and this may weaken the rupee and it may fall to 86.50 per dollar by the end of December. At the same time, Commerzbank estimates that the rupee may fall to ₹ 87.50 per dollar. Currently, the rupee is around ₹ 85.42 per dollar.

Efforts to strengthen forex reserves According to the report of Barclays Bank, the rupee can remain weak even when the dollar itself is under pressure. RBI is currently gradually ending its forward deals and is also trying to strengthen its foreign exchange reserves again. IDFC First Bank's Chief Economist, Gaura Sen Gupta says that RBI will try to keep the forward book small, so that there is no much pressure on the foreign reserves. There has not been much change in the rupee this quarter, while other Asian currencies have strengthened against the dollar. One reason for this is also the withdrawal of foreign investment from India's bond market. RBI Governor Sanjay Malhotra has shown some flexibility in allowing the price of the currency to be decided according to the market. RBI's recent report said that foreign exchange reserves will handle currency fluctuations and will help deal with economic and geo-political shocks in future. According to RBI, the short dollar book for up to 3 months was $15 billion in April. Whereas, the book for 3 months to 1 year was $37.8 billion. If these deals are not taken forward, then the foreign exchange reserves may be affected. As of May 23, India's foreign exchange reserves were $693 billion. Which is less than the record of $705 billion of September 2023.
 

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