Forex experts believe the rupee could depreciate in 2020. Stellar fund flows in the form of foreign portfolio investor (FPI) flows and foreign direct investment (FDI) notwithstanding, the rupee lost value in 2019, weakening by 2.259% against the dollar. The Indian currency was the second-worst performer in Asia.

Manish Wadhawan, independent fixed income and forex expert, expects the rupee to be trading in the range of 73-74 against the dollar by the end of 2020.

Wadhawan also expects foreign portfolio investor (FPI) inflows to moderate next year. “The year 2019 has been one of the best in terms of foreign portfolio and FDI flows over the last decade. However, 2020 may not see a repeat of the same. Emerging markets are expected to do better next year and flows are expected to be robust,” he said.

The trend oil prices and fund flows will be crucial in determining the trajectory of the currency in 2020, say currency experts. Brent prices have climbed from $53.80 per barrel at the beginning of 2019 to $66.69 per barrel by Tuesday.

Experts say a part of the rupee’s depreciation in 2019 could be attributed to the central bank shoring up its forex reserves. According to the latest RBI data, India’s forex reserves stood at $454.948 billion as on December 20, in comparison to $393.404 billion at the end of December 2018. FPIs have pumped in $18.19 billion into equities and bonds in 2019.

Furthermore, the year has also seen reasonably good FDI flows — the Department For Promotion of Industry and Internal Trade (DPIIT) said total FDI inflows into India till the first half of 2019 stood at $39 billion.

Meanwhile, the dollar index, which tracks the strength of the greenback against a basket of US trade partners’ currencies, remained stable in 2019, rising from 96.08 at the beginning the year to 96.46 at the end.