Modi effect: Rupee best performing Asia-Pacific currency

New Delhi: Boosted by capital inflows and euphoria around the incoming government, rupee's surge to   11-month high levels has made it the best performing currency in Asia-Pacific region against the US dollar so far in 2014.  

With a gain of about 5.3 per cent since the start of this  year, rupee has sprinted ahead of its other Asia-Pacific   peers, including Indonesia's rupiah and New Zealand dollar,   in terms of year-to-date rise, shows an analysis of various   currencies vis-a-vis the Greenback. The rupee, which closed at 58.52 levels against the US   dollar on the last trading day on Friday, has incidentally   seen a lion's share of 5.3 per cent gain in the past one   month.  

The Indian currency stood at Rs 61.8 level per US dollar at the start of 2014 and has recorded a gain of 327 paise in   less than six months, partly helped by robust foreign fund   inflows. This marks a major turnaround since August last year   when rupee touched its life-time low of 68.80. "Positive sentiments out of the election results   enabled us to upgrade our FII flows estimates by USD 5 billion   to USD 20 billion, implying an overall BOP (balance of   payment) surplus of USD 29 billion. We expect the USD/INR   range to be 57-61 in FY2015," said Indranil Pan, Chief   Economist of Kotak Mahindra Bank, in a report.   Under the leadership of its prime ministerial candidate  Narendra Modi, BJP has recorded an unprecedented victory in   the recently held Lok Sabha elections and the Gujarat   strongman will be sworn in as Prime Minister on Monday.  

The highest-ever tally in the Lok Sabha elections has   helped BJP secure a majority on its own, thus raising hopes of   big-bang reforms to revive the economy.   In Asia-Pacific, the rupee's gains versus the US dollar   are followed by the Rupiah (Indonesia) that has appreciated   4.6 per cent, New Zealand dollar's 3.75 per cent rise and   Australian currency's 3.5 per cent rise.   The Yen (Japan), the Won (South Korea) and the Ringgit   (Malaysia) have gained between 2-3 per cent in this calendar   year so far.   Philippines Peso has appreciated 1.6 per cent against the   US dollar, followed by 0.5 per cent uptick in Thailand's Baht   and Singaporean dollar.

 While the Hong Kong dollar is almost unchanged since 2014 started, the Taiwan dollar and Chinese   Yuan have lost value.   Some analysts, however, feel that the Indian rupee faces   risk of some depreciation after its recent strong show.   "While Indian rupee is expected to depreciate slightly   against the USD from current levels (we pencil USD/INR to   hover around 60 for this fiscal year), we expect it to gain   against Yen and Swiss Franc," said a report from ICICI Bank Treasury Research Group.