Rupee in 2018 - Projection for 2019

Indian Rupee had quite a tough year in 2018.  In 2018 INR depreciated by 10%.

This depreciation of Rupee almost tracks the movement of oil prices.

Oil prices increased - Rupee depreciated, oil prices decreased - Rupee appreciated.

Interestingly INR was the currency which was performing at the worst amongst all emerging economy currencies till October when oil prices were at its peak, thereafter in an U-turn INR became the best performing emerging economy currency when there was dip in oil prices.

The other factors apart from oil, which impacted Rupee movement significantly in 2018 are

• Trade war between USA & China
• Fed rate hike - 4 rate hikes made US Dollar more attractive
• Turkey LIRA crises - this had a sentimental effect on INR
• Movement of stock market - (see graph below) - a 6% increase in stock market in 2018 contained to some extent the depreciation of the Rupee

What lies ahead in 2019 for the Rupee

The below factors will weigh on the Rupee in 2019

• Growth fundamentals of India economy - GDP growth is projected to be positive @ 7.3%.  Inflation will be low.  Industrial & Agricultural growth will be moderate.  This will have a appreciating impact on Rupee
• Political stability - In the general election of 2019 if there is a stable government -  It will have a appreciating impact on Rupee.  If there is a hung parliament It will have a depreciating impact on Rupee
• Fed reserve planned rate hikes in 2019.  It will have a depreciating impact on Rupee
• Oil is not projected to be very volatile and will be more stable.  It will have a appreciating impact on Rupee. 

My Projection : Overall Rupee will be less volatile in 2019 and should move in the range between 68 to 72 for the full year of 2019