Indian rupee

Today, India is among the world's fastest developing countries and has the prestigious 12th position by the GDP reading. At the same time its purchasing capacity is very high and is amounting to $4.726 trillion.

India’s national currency is rupee, which is among 15 world's most traded currencies. The INRUSD exchange rate is controlled by the Reserve Bank of India (RBI). However, such currency pairs as INREUR and INRJPY, are volatile and are floating freely. The exchange rate of Indian rupee is determined by the results of the Asian trading session from 03:00 to 11:00 (04:00 – 12:00 summer time) (GTM +3 / GTM +4). Currently traders can see the rupee strengthening its position on the global market. This is demonstrated by the fact that since late 90’s the turnover of the rupee forward foreign exchange contracts on Singapore Exchange (SGX) and London Stock Exchange (LSE) has increased to $1.5 billion from $50 million a day. Such a rapid expansion in currency trades in the country and abroad resulted in increasing of its share in the global currency market turnover to 0.7% from 0.2%.

However, despite the country’s accelerating economic growth, there are some factors which have a negative influence on the Indian rupee exchange rate: poor infrastructure, first of all, great contrast between people in terms of economic and social status, and India's dependence on foreign oil.

Nevertheless, investor interest in Indian rupee can already be observed now. Volume of currency transactions including the rupee is growing gradually, with the following factors proving it:

  • increasing average daily trading volume on domestic currency market;
  • currency liberalization in the country, accompanied by successful reforms in public finance, banking sector, and on securities market;
  • increasing domestic financial stability, including lower inflation;
  • rich foreign exchange reserves of India;
  • significant expansion of foreign investments in the country.

Moreover, recently India’s monetary policy is characterized by active investments in foreign economies, so that the national currency’s exchange rate strengthens and becomes more attractive for trading. There are all conditions for investors from nearby countries, including Nepal, Pakistan, China and maritime neighbors Maldives, Indonesia, Sri-Lanka to start investing in the Indian rupee.

In spite of all positive factors and prospects for growth, the country should conduct a series of reforms in order to improve its internal and external economic and financial capacities:

  • solve the problem of insufficient energy resources;
  • maintain and increase its GDP level every year;
  • launch anti-corruption campaign and cut red tape in administrative issues.

Having solved numerous problems India will be able to compete with European countries.