India is a major beneficiary of improved global liquidity on lower crude prices. Cheaper crude is a big positive for the Indian economy in such trying times.

Weakness in the US dollar has led to appreciation in emerging market (EM) currencies. The Indian rupee also remained in a narrow range of 75.30-76.50 per dollar.

After the recent breakdown in USDINR, the appreciation trend in the rupee is likely to pick up from current levels, ICICI Direct has said in a report.

The rupee had outperformed other emerging market currencies in the first quarter of the year despite high FII outflows.

FII outflows in March of almost Rs 1,23,000 crore, in both equity and debt segments, led to rupee depreciation. However, the current forex reserves have surpassed even March highs and India holds the world’s fourth-largest reserve.

Moreover, block deals in the last couple of months have kept the net FII figures positive in equities. The RBI can also step in and keep rupee stable with such large reserves.

EM Currency

India is a major beneficiary of improved global liquidity on lower crude prices. Lower crude prices are a big positive for the Indian economy in such a tough time.

The current account deficit (CAD) has also come into positive territory which should support the rupee. “We believe USDINR has given a breakdown of the last three months range of 75.30-76.6 and it should remain in appreciation mode for some time. Even the current move of appreciation can extend towards 73,” said the report.

Companies to benefit

The rupee outperformance vis a vis emerging market currencies is expected to continue on the back of lower crude prices which will have a positive impact on India’s macros.

Companies that are likely to benefit the most include Adani Enterprises, Bosch, Havells India, Voltas, JSW Steel, Nestle India, Bata India, and Pidilite Industries, said the report.


In addition, dollar scarcity has also declined. The current appreciation trend may continue until 73 levels. This is where the above set of stocks, which have net dollar payment, will benefit from this rupee reversal move.

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First Published on Jul 10, 2020 01:05 pm

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