The rupee on Monday is expected to feel the knock-on effect of the brutal terrorist attack in Paris with investors seen taking the flight to safety.

Forex market experts see the domestic currency opening almost 30 paise weaker compared with Friday’s close of 66.095 to the dollar.

On Friday night militants of the Islamic State killed at least 120 people in gun and bomb attacks in the French capital.

Ashutosh Khajuria, Executive Director, Federal Bank said “It (reaction to negative global events) is always a flight towards safety and dollar appreciation would happen in the morning. You would be noticing it more in opening trades in South East Asia, Japan, Sydney and all that and the same impact should be there in India also.”

In the process the rupee may move towards 67 by December-end, Khajuria said and added “I will not be surprised.”

Flight to safety means increase in appetite for safe assets vis-à-vis riskier assets. In the forex market context, this will mean moving investments into dollar assets.

In the last one week the rupee has depreciated from 65.76 (closing level on November 6) to 66.095 (on November 13) per dollar.  

“I think depreciation would be good. It will be in the interest of India’s external trade because exports and all are suffering because of rupee’s strength.

“Competitive economies such as Thailand, Malaysia, Indonesia, Brazil and Turkey have seen more depreciation of their domestic currency and therefore it becomes important for Indian policy makers to see that rupee does not appreciate beyond a point, rather it moves towards depreciation,” explained the top Federal Bank official.

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