Does rupee fear Fed’s stimulus taper?

Sachin Karpe has been observing the rupee behavior since last few months. After it regained the figure between 60 and 61, it is again showing signs of volatility. This has resulted from the signs of recovery shown by US.

US jobs data has come up with good numbers depicting signs of stronger recovery. This may lead to stimulus tapering much earlier than expected, observed Sachin Karpe. Shares of developed economies like Europe and Japan went up taking cue from the boosted growth in US. Asian shares remained affected as they came down fearing less liquidity in coming days. Rupee has taken hit and depreciated again against dollar, fearing capital outflows.

The change in expectations has been reflected in the U.S. Treasury market where yields on the 10-year benchmark jumped to 2.75 percent on Friday, from 2.60 percent. These now offer a pick up over equivalent European and Japanese bonds, said Sachin Karpe, citing a report on Firstpost

In the coming days, Rupee is expected to show same behavior. It needs stronger global signs to gain normalcy. Strong Indian exports have benefited with this fall. Due to appreciating Yuan and addition of labour cost in China, many exports are now being directed to India, doing only goo to India’s import bills, says Sachin Karpe.

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