Indian Rupee Triumphs as Top Performing Crypto in Asia, January 2024

• Indian Rupee Emerges as Top Performing Currency in Asian Markets for January 2024
• Performance Against Other Asian Currencies
• Indian Rupee vs U.S. Dollar
• Forex Investors Project a Bright Future for Indian Rupee in 2024
• Understanding the Put Option

Indian Rupee Emerges as Top Performing Currency in Asian Markets for January 2024

The Indian Rupee has made a remarkable comeback in January 2024, after a tumultuous performance in 2023, emerging as the top-performing currency in the Asian markets. The markets in India are currently expecting billions in inflows via bond yields, which is adding strength to the Rupee.

Performance Against Other Asian Currencies

The Rupee outshone other leading Asian currencies like the Chinese Yuan, Japanese Yen, and Russian Ruble consistently for three weeks. Moreover, it dominated in the foreign exchange markets, becoming the most valued Asian currency. While other Asian currencies depreciated by 1% to 4% this month, the Indian Rupee appreciated by a commendable 1% to 2%.

Indian Rupee vs U.S. Dollar

The Indian Rupee also held its ground against the U.S. dollar appreciating nearly 0.1% in the dollar index. However, the consistently strong U.S. dollar is somewhat slowing the Rupee's growth, keeping it from breaking below the 83 threshold. The USD/INR index settled at 83.15 per dollar at the beginning of the week.

The markets are pre-empting the anticipated influx via the bond inclusion. This is possibly why the rupee has remained largely stable, shared Indranil Pan, Chief Economist at YES Bank.

Forex Investors Project a Bright Future for Indian Rupee in 2024

Forex investors have shown keen interest in the Indian Rupee in 2024, with offshore banks advising clients to utilise the Put option in the INR/USD trading pair. Data from these offshore banks suggest that the Indian Rupee could potentially outperform the US dollar this year.

Understanding the Put Option

The Put option allows investors to sell the USD-INR pair at a specified rate, known as the strike price. The buyer needs to pay a small fee for the option while losses are confined only to the premium paid.

Nearly all offshore banks are advising their clients to take long positions on the Rupee. This can be achieved either outright or via Put (USD/INR) options, explained a Portfolio Manager at a Singapore-based hedge fund.

Edited by Jonathan Stoker