Indian Rupee Faces Competition from Japanese Yen and Chinese Yuan
In the last quarter, the Indian rupee faced strong competition from major Asian currencies, particularly Japan’s yen and the Chinese yuan. The rupee depreciated by 0.6% over the past three months, while the yen and yuan appreciated against the U.S. dollar. The yen saw a sharp 9% appreciation, and the yuan rose by more than 3%.
Reasons for Currency Changes
Experts attribute the rupee’s decline to short-term events. Japan’s yen appreciated significantly after the country announced its first rate cut in 20 years, attracting investors and increasing liquidity. Similarly, China’s yuan benefited from a government stimulus package that boosted market confidence.
Expert Insights
Ajay Kedia, Director of Kedia Advisory, explained that the rupee’s depreciation is temporary and not due to long-term factors. He noted that the rupee remains strong and improved following the U.S. Federal Reserve’s rate cut, which made Indian markets more attractive to foreign investors. The rupee is expected to stay in the range of 83.56-84.28 against the dollar.
Despite the recent short-term impacts from Japan and China, experts remain optimistic about the long-term stability of the Indian rupee.
Doubts Revealed
Indian Rupee -: The Indian Rupee is the official currency of India. It is used for buying and selling goods and services in the country.
Japanese Yen -: The Japanese Yen is the official currency of Japan. It is one of the most traded currencies in the world.
Chinese Yuan -: The Chinese Yuan is the official currency of China. It is used for transactions within China and is becoming more important globally.
Depreciated -: When a currency depreciates, it means it has lost value compared to other currencies. This can make imported goods more expensive.
Appreciated -: When a currency appreciates, it means it has gained value compared to other currencies. This can make exported goods more expensive.
U.S. Dollar -: The U.S. Dollar is the official currency of the United States. It is widely used in international trade and finance.
Rate Cut -: A rate cut is when a country’s central bank lowers interest rates. This can make borrowing cheaper and encourage spending.
Stimulus -: A stimulus is an action taken by a government to encourage economic growth, often by spending money or cutting taxes.
Ajay Kedia -: Ajay Kedia is an expert from Kedia Advisory, a company that provides financial advice and analysis.
U.S. Federal Reserve -: The U.S. Federal Reserve is the central bank of the United States. It manages the country’s money supply and interest rates.
