What is the biggest risk in the rupee as of today?
The biggest risk for the rupees currency right now is an economic slowdown in China and a rise in interest rates in India, said a report by market research firm Fitch Ratings.
In a note to clients today, Fitch said the risks of economic slowdown and a fall in interest rate to the rupext have not yet materialised.
“While we expect a sustained economic recovery to begin this year, the longer term outlook remains uncertain,” the note said.
“There are also risks from a weakening dollar and potential adverse contagion from US policy tightening.
In particular, the Fed will likely begin tightening monetary policy to address the weak dollar, which could have a negative impact on the rupes global economic outlook.”
Fitch Ratings said the currency is trading at a 1.9% low against the dollar, up from a 2.6% low earlier this month.
The index is currently at its lowest since March 2016.
Fitch warned that the rugext could weaken to a level of 0.7% by end-March.
The rupee, which is seen as a safe haven currency against US interest rates, is expected to strengthen further in March after the Federal Reserve lifted rates for the first time in six years.
Finance Minister Arun Jaitley had last week said the ruperc would rise in March.