The Rupee was declared the best performing currency in Asia in March 2019! Financial trends and analytics are at the core of predicting the value of the currency in the international stock markets. So, when the findings revealed that the rupee had suddenly in little over a month everyone was curious as to the factors that led up to this change in fortunes.
Factors fuelling the recovery:
The 2019 midterm polls: The very announcement of the polling schedule impacted the rupee positively. It is normal that new brooms bring in new changes. And the stocks responded positively to this factor by seeing a sudden pick up in values against the Euros, Yen, and US dollar as comparative currencies.
The present PM could win the next term: If you believe the trends reported by analytics of data on the pre-poll sentiments the present PM has a very good chance at repeating his last performance and becoming a second-term PM. He does have to his credit the much-debated demonetization and flushing off illegitimate funds from the system to account for. Besides, the thrust area of turning India into a digital economy saw the great implementation of such practices which have been generally speaking quite successful. A second term will push the rupee values up further according to some experts in poll-analytics.
Escalated Indo-Pak tensions: India sent out a firm message after tensions sprung up post the Pulwama attacks and India’s retaliatory measures at ending terrorism in J and K. The world finally recognized the dangers breeding there and this caused a spurt in values for the Indian rupee. This also contributed hugely to an improvement in the PM’s ratings as a potential second-term candidate.
Huge positive sentiments in buying of shares: This type of investment by foreign stakeholders went ballistic in mid-March and raised bond values to a high within a short period of one month.
Borrowings in US dollars: This factor aided by buying of assets strengthened the rupee values further and helped arrest the downslide against the US dollar.
US and Europe positive sentiments: Though the US has been speaking tough, there has been perceptible bettering of relations with both big players and their stock markets and financial institutions in the global economy, and this in conjunction with other factors caused the rise in values according to a segment of Bloomberg experts.
The robust recovery in cash-flows to portfolio management: This came about with the bettering of the BJP a political party that appears to be set to win the on-going seven-phased polls.
Anticipated volatility fell: A decrease in the 3-month period of the anticipated figures for price-volatility and movement of monies fell to reasonable limits recently which spurred the recovery and price-improvements seen by the Indian rupee versus the US dollar.
What does this mean?
The results of the polls which is due to complete in mid-May could be the crucial factor for the resilience in the rupee values. Should BJP manage a clear win the prices will stabilize as versus the dollar and this augurs well for the Indian economy. Going from the worst performing to the best in its class is an unexplained trend at the moment mainly due to the ambiguity of the poll results being an important factor. However, other indices and factors like good money-flows, carrying-over of trade prices of the rupee, increased chances for the PM and BJP to win the polls and stabilization of conflicts along with better relationships globally have also contributed to this success story.
How you can get a better understanding:
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