INR /USD view

After being the worst performer currency in Asia pack in the year 2011 , INR has been the best performing currency in Asia till 9th February .When rupee had touched 54 both External and Internal factors were not in its favor . USD was gaining strength due to risk aversion and Euro confusion and in internal factor Current account deficit and Inflation was the prime reason. Internal factor has not changed so drastically but some other factors like RBI liberalization in Capital account ( NRI Investment & allowing foreign individual to direct investment) and better than expected FII inflow to the stock and debt market of India has helped the rupee to appreciate. Although all other currency of Asia has appreciated significantly INR has appreciated little faster. Due to this there is possibility of short term correction in INR in the next few weeks to 50.50 levels. Some other factors like poor IIP data , increasing Trade deficit may put pressure to INR in the near future .One more reason INR may depreciate marginally is that after seeing INR below 50 level for some time now , RBI may start buying USD to improve its FXreserve which has fallen to USD 294 Billion in the recent past.