USDINR is at 94.96 from its peak of 96.85
How much savings do we make approximately and what are the key drivers?
From the recent peak of 96.85 to around 94.96, the rupee is stronger by about 1.89 per dollar.
India’s top 3 import segments are:
Petroleum/crude and its products
Electronic goods
Gold
Total bill run at roughly $360–365 billion a year, or about $990–1,000 million a day. Roughly $1 billion.
Daily rupee saving on this import bill is around 1,850–1,900 crore. Roughly 2000 crores is the daily saving.
As a rule of thumb, you can say that, in the current setup, we save 1,000 crores with every one rupee appreciation on the exchange rate.
This is a simple arithmetic estimate based on the exchange rate gap applied to the average daily value of those three segments.
Actual daily savings will vary with oil prices, volumes, and the exact mix ofiall the mports.
Key Drivers Pulling USD/INR Down
RBI FX Intervention is working along with the liquidity measure it took as I discussed in one of the previous post.
Easing US yields and Federal Reserve rate-cut expectations are diminishing dollar demand.
Lower crude oil prices and declining oil import bills are reducing corporate dollar outflows from India's largest import sector.
Renewed foreign portfolio buying in Indian equities and sovereign debt is boosting INR demand.
Exporters are hedging near multi-week highs, paired with ECB and FDI inflows and hence supply fresh dollar liquidity to the market.
In EconSphere
