The rupee is anticipated to experience more pressure due to the risk-off attitude on global markets brought on by the Credit Suisse disaster. The domestic currency decreased slightly towards 82. 79 in postmarket transactions after closing at 82. 61 on Wednesday’s interbank foreign exchange market.
According to bankers, since issues have been percolating within the banking group for some time, the problems with Credit Suisse are unlikely to have any immediate effects on the Indian financial system. Bankers also claimed that Credit Suisse’s issues were unrelated to the Silicon Valley Bank crisis, and many believed that the European government would bail out the bank.
Government sources concurred that India would not be impacted by a Credit Suisse crisis because the issue with the bank was mostly focused on its home market of Europe and its minimal wholesale business in India.
“Until the US Fed meets to decide on interest rates on March 22, the market will remain unclear. The Fed pausing its operations because of a slowing economy would be the best-case scenario for India. As stated by Ashhish Vaidya, head of treasury at DBS Bank, “weaker oil prices and a Fed halt would urge the RBI’s monetary policy committee to pause as well.
Dealers assert that the rupee will be more pressured as a result of the instability in the European and US stock markets potentially spreading to Indian equities. “If there is a risk-off mentality, there is likely to be an exodus from foreign institutional investors, which will put pressure on the currency rate. The yield on US treasuries is fluctuating wildly, which is bad for the financial markets, according to United Consultants managing partner K N Dey.
The rupee was trading with a falling trend throughout the session due to dollar demand from importers and foreign banks, according to IFA Global in a research note.