Rupee’s advance seen as unsustainable by analysts

Bloomberg

The bounce in India’s rupee that’s made it the top performer among major Asian economies is failing to win over traders.
The currency has risen about 1% in the past month after falling by as much 1.2% in October and November. Traders say the fillip provided by a one-off corporate inflow of about $6 billion in recent weeks and a change in the central bank’s foreign-currency management strategy is unlikely to last.
The Reserve Bank of India (RBI) likely sold $130 million of foreign-currency assets in the week ended December 6, according to Bloomberg Economics. That compares with an addition of $17 billion to its forex reserves in the two months to November, which analysts say was the reason behind the rupee’s subdued performance during the
period.
“It seems that the RBI has stood out a little bit” in letting the rupee strengthen, said Mitul Kotecha, a senior EM strategist at TD Securities in Singapore. “I expect any appreciation to be limited from here.”