Currency watch: indian rupee no longer world’s weakest currency

Photo: Add1Sun

New figures from Nomura Holdings show that the title no belongs to the rupiah. Indonesia’s currency has weakened by 14 per cent since June 2013, a drop that eclipses that of India’s currency, which slipped 10 per cent over the same period.

The fall of India’s currency sparked a surprise move from the country last month. In an attempt to shore up the rupee, the Reserve Bank of India banned all outgoing investment in overseas property from Indian residents – a decision that left Indian buyers with ruined dreams of holiday homes in Spain or elsewhere.

Experts have since speculated whether it will drive more buyers to invest in the local housing market, although the impact of RBI’s new regulations is projected to be mild.

Now, though, Indian officials can take some solace from Indonesia’s currency, which is attributed by Bloomberg to its “record current-account deficit”, which is expected to drive away foreign investors.

“The need to defend the currency while also improving the current-account deficit leaves the country with one option -- to raise interest rates,” Credit Suisse Group AG is quoted as saying by Bloomberg. “Higher rates can attract more bond flows, enhance investor confidence in the country’s commitment to defend the currency and cut the current-account deficit.”

Other currency news this week:

German sentiment grows thanks to euro boost

German sentiment grew in September 2013 thanks to a boost from the euro zone. A survey of economic sentiment rose to the highest level in over two years in August, pushing the euro to a session high against the dollar, reports Reuters.

The stabilisation of the troubled EU economy is good news for Germany. The continent’s largest economy has led recovery this year, with a growth of 0.7 per cent recorded in the second quarter of 2013. Whether it will help Angela Merkel achieve a third term in Sunday’s upcoming elections is yet to be seen.