Rupee has now recovered 6.8 per cent since last week
The Indian rupee recovered to Rs17.30 against the UAE dirham (Rs63.51 vs $1) at 7.15pm UAE time (3.15pm GMT) on Tuesday as rockstar Rajan's honeymoon with his new position as the governor of Reserve Bank of India (RBI) continues.
The rupee has now recovered 6.8 per cent since last week, and almost 7.8 per cent since hitting a lifetime low of Rs18.75 vs Dh1 (Rs68.89 vs $1) two weeks ago, on August 28, 2013.
Considering the battering that the Indian rupee received in the month of August, the recent improvement in its fortunes should have brought a sigh of relief for the new RBI governor Raghuram Rajan.
Rockstar Rajan, as the new 'Guv' is being dubbed by local and international media for his suave demeanor and savvy media handling, took over the RBI's highest post on September 4, 2013.
As if to celebrate the rockstar's appointment, the Indian rupee has since appreciated 6.8 per cent, which is a massive reversal on the trend that saw the beleaguered currency plummet by more than 28 per cent in less than four months, between May 2 and August 28, 2013.
In fact, including today's gains, the rupee has now seen its largest 4-day gain since 1973, and with increasing expectations of a narrowing trade deficit, the rupee may well have embarked upon a (short-term) recovery trail.
While a boost in market sentiment was cited for the trend reversal of initial couple of days, the most recent gains are being credited to the US payrolls data and a slight easing of geopolitical concerns over Syria.
Either way, Rajan will be using this breathing space to put in place a policy change infrastructure to counter the month-end demand for dollars and, much more importantly, the first real signs of fiscal pullback by the US Federal Reserve on September 20, 2013.
The benchmark BSE Sensex index surged 727 points today, and closed just shy of the 20,000-points mark while the rupee is trading at its strongest in two weeks' time, with analysts expecting it to recover further in the next few days.
But will it continue to recover post that period? Now that's another story.
© Emirates 24|7 2013
