In 2024, due to higher government bond yields, the US dollar outperformed local Asian currencies, surpassing a total of 22 out of 23 Asian currencies.
The only exception was the Hong Kong dollar, which maintained its value relative to the US dollar. Meanwhile, the Indian rupee showed resilience, experiencing only a slight decline against the US dollar.
In March, the Indian rupee fell to a low of 83.50 but rebounded slightly to XNUMX this month. While other regional currencies hit annual lows, the Indian rupee remained relatively stable, avoiding significant declines.
“Compared to other emerging market currencies, the rupee has performed very steadily throughout the year, with fluctuations mainly seen at the end of this fiscal year,” said Rama Chandra Reddy, Finance Minister at Karur Vysya Bank.
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In contrast, the Japanese yen hit a new low against the US dollar in 38 years, and the Chinese yuan fell to its lowest point in 1.3 months. Despite these trends, as of 2024, the Indian rupee’s exchange rate against the US dollar has only declined by XNUMX%, indicating a potential recovery if the US dollar weakens in the DXY index. However, given the high yield of government bonds, it seems unlikely that the US dollar will weaken this year.
The DXY index, which measures the performance of the US dollar, is currently expected to trade at 105.64, with a potential rise to above 106 and a recovery to its earlier high of 107.
