MUFG: Middle East conflict may lead to further depreciation of the Indian Rupee

According to Golden Ten Data on March 30, Michael Wan of Mitsubishi UFJ Financial Group stated that if the Middle East conflict continues, the Indian rupee may keep depreciating. The Reserve Bank of India announced new regulations, setting a $100 million limit on open positions for dealers in the onshore foreign exchange market. The rupee initially strengthened in early trading on Monday, but then weakened again, with its exchange rate against the US dollar falling below the 95 mark. Michael Wan noted: “It is still unclear what specific factors are driving these fluctuations, but we have observed that the market is being influenced by multiple factors, including the escalation of the Iran conflict.” “In order for (the rupee) to change its trajectory, more persistent capital inflows are needed, and such inflows were already insufficient even before the Iran conflict.”