The US Dollar May See Record High Versus Indian Rupee After RBI Seized Yes Bank’s Bond Certificates. Is it only the perception that is inspiring this notion? That is one of the misconceptions among global investors, who have an unshakable belief that the US Dollar will remain strong against the Indian Rupee for as long as they are, on a global scale, pleased with the way things are going. Indeed, this is how it works with currencies, but if you ask me, I am not as convinced about it as some are.
Well, considering how well the US Dollar has done, and being quite close to a record, you would be a little surprised to hear me say that it is unlikely that the US Dollar will see record highs versus the Indian Rupee, yet. But, here is another factor in my head that certainly says a record high for the US Dollar is not what I am expecting. How much have we known about the history of the Indus Waters Treaty (IWT), which governs the River Indus Basin?
Since the US had engaged in covert acts and subversive activities in India, we have known that the Indian Rupee was undervalued, but the IWT was supposed to make things easier for the Indians. In other words, the IWT brought balance between the two currencies, as dictated by the UN.
Well, the US Dollar is still weak, and there is no sign of it getting stronger. That means the USD is more or less stable and will not see the kind of improvement that the other commodities like gold, have seen.
This is why I am saying that a record high for the USD against the Indian Rupee is still unlikely. The Asian Infrastructure Investment Bank (AIIB), which was not expected to do well, did not have a stellar record either.
Since the US has a lot to gain from AIIB, the other issue here is that the US Dollar could benefit from the stability that the Indian Rupee has brought to the Forex markets, including the USD/INR exchange rate. This is an argument that I am hearing a lot lately.
If a trading firm is able to trade dollars for INR, it will make a lot of money. It’s just the nature of the beast, and even if one or the other starts losing ground, it still looks good for the USD in the long run.
I am not so sure, however, that the USD will continue to be the leader in the future. If one day the US Dollar turns down against the Indian Rupee, it could become very difficult for the US Dollar to maintain its global dominance.
Indeed, there is an argument to be made that the USD could begin to lose its position as the global leader against the Indian Rupee, though. The currency markets have been volatile, and with so many risks involved, some traders have ended up over- or under-buying in times of potential trouble.
Remember, some of the large holders of the Indian Rupee like the Royal Bank of Scotland, can even go bankrupt. There are others who can save themselves from default by selling their positions, so there is plenty of wiggle room when it comes to hedging currencies.
The real question is whether other commodities will get more people interested in buying the Indian Rupee, and this seems to be the real risk. If a large number of buyers take interest in the rupee, then a sudden fall in the value of the dollar could affect the overall value of the Indian Rupee and could cause problems for the global economy.
The future holds many surprises, so it is best to be prepared for both extremes, though the odds are that the USD will remain strong and we will have to wait a few more years before the rupee’s value rises too far enough to force the market into a price war. trend.