Investment firm BlackRock plans to use the slump in the price of the rupee during the pandemic for its advantage. This comes at a time when the second wave of the pandemic is a dent in overseas investor confidence.
In such a situation, portfolio managers are compelled to focus on the country's long-term growth prospects, with consumption expected to recover once the virus is a thing of the past. While the second round of Covid 19 fueled the world’s worst health crisis, a rebound in the currency and limited stock outflows attest to investors’ confidence in the Indian economy. As against $8.4 billion equities pulled from India's equities in March 2020, it has been only $1.5 billion from this year in April.
The Indian Rupee has rebounded to become Asia’s best performer in May 2021, and BlackRock Inc. expects it to remain steady as India’s imports are shrinking due to the pandemic, and helping push up the current account balance of the country. Dollar-denominated credit seems to be another vertical of interest for investors. BlackRock believes that investment-grade issuers including conglomerates and quasi-sovereigns will be less impacted by the drop in consumer spending and confidence.