After very troubled year, Indian rupee to be a top performer of 2019?

The Indian rupee — which has been in constant decline this year, it fell over 13% in 2018 — may be a top performer of 2019, analysts have said.

Tumbling oil prices have put the rupee on course for the best quarter in nearly two years.

The rally is expected to run well into the new year. During most of this year, elevated energy costs and a strong dollar combined to make the rupee Asia’s worst performer.

Add WION as a Preferred Source

But a slump in crude oil prices and a slowdown in the pace of tightening by the federal reserve mean that rupee may resume its winning ways in 2019.

The rupee jumped nearly 2.1 per cent on Monday and Tuesday alone. This is welcome news as political uncertainties were expected to trip up the currency. Lower crude prices have, however, offset that.

Some analysts say that in the short term, the rupee will appreciate further.

Softening of inflation, less hawkishness from the US Federal and hopes of increased capital inflows, a consequence of falling crude oil prices, are some of the reasons which have led to a surge in the Indian rupee against the greenback.

The recent surge is quite significant because rupee was heading towards its worst year since 2013 until the appreciation in the last few days.

It's not only the US Central bank's decision that is aiding the rupee. Reserve bank of India has decided to increase liquidity infusion by 10,000 crore rupees this month. The overall liquidity infusion by RBI will be 50,000 crore rupees. Not just that. RBI has already infused 20,000 crore rupees through purchase auctions open market operations.

All of these are likely to give some respite to the Indian rupee.