Citigroup: Indian companies expect the rupee to continue weakening and are increasing their currency hedging strategies

Golden Ten Data reported on July 16 that Citigroup (C.N) stated its corporate clients in India generally expect the Indian Rupee to continue depreciating in the future and are seeking financial products that can profit from exchange rate fluctuations. Vandana Bhatter, Head of Corporate FX Sales for Citi Asia Pacific, said: “Clients widely believe that, in the medium to long term, the Rupee will continue to depreciate in line with the trend of interest rate differentials. This expectation has prompted companies to shift toward product structures that both offer protection and allow them to share in returns when the Rupee experiences significant volatility.” Over the past year, the Indian Rupee has depreciated about 11% against the US dollar, making it the worst-performing Asian currency in the same period. The weakness of the Rupee is mainly driven by the US imposing higher tariffs on India last year, rising oil prices due to the Iran war, and market expectations of the Federal Reserve maintaining higher rates and a stronger US dollar.