Financial markets welcomed signals of reduced tensions surrounding Greenland, fostering renewed optimism and aiding the Indian rupee’s bounce. According to DBS Bank’s new report, this shift promises better market outlooks and less aggressive rupee weakening.
Thursday’s initial trades reflected the positivity, with the rupee firming up 15 paise to 91.50 per dollar from nadir points. Executive Director Radhika Rao pointed to entrenched negative trends fueled by worldwide and Indian-specific dynamics.
The VIX’s steep climb illustrated market frailties, compounded by geopolitical unrest and bond yield elevations, Rao elaborated. Greenland’s calming scenario delivers critical relief.
Market cheer is amplified by an expected EU trade pact reveal next week and promising US dialogues at the economic forum. India’s economy thrives with 8% quarterly growth averages and 7.5%+ projections, even as the rupee faces headwinds.
Soft rupee dynamics help import-duty-hit exporters but spur imbalances elsewhere. Current account deficit holds steady near 1-1.2% GDP, DBS assesses, though FPI dynamics trouble: post-2025 equity drains of $3 billion this year, lackluster bonds, and repatriation-dampened FDI.
Upcoming budget outlays will be telling, amid forecasts of higher center-state debt by FY2027. With global risks receding, rupee recovery and market steadiness are on the horizon.