Rupee closes at 76.67, up 0.22%, from its previous close
Analysts are pencilling in further weakness in the rupee going forward as the risk-off trade is still continuing amid rising coronavirus cases globally
Indian rupee touched an all-time low of 76.92 against the US dollar but recovered soon and strengthened by late-afternoon on Wednesday amid a recovery in the domestic stock market and the expectation of a large FDI coming in from the Reliance Jio-Facebook deal.
Rupee closed at 76.67, up 0.22%, from its previous close. It recorded its previous all-time low on April 16, when it slumped to 76.87 against US dollar. Over the past week, the US dollar has been strengthening against a basket of currencies as investors fled to safe haven greenback amid weakening risk appetite, which was exerting pressures on the rupee.
Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services, said "USD/INR spot breached fresh record high of 76.90, however, it didn't sustain and fell on dollar selling ahead of the Facebook and Reliance deal. Facebook plans to invest nearly $5.7 billion, the money will hit forex market in tranches either end of this month or sometime next month."
Analysts are, however, pencilling in further weakness in the rupee going forward as the risk-off trade is still continuing amid rising coronavirus cases globally. Foreign investors continue to sell in the domestic cash markets.
"Global market is still risk averse it is virtually impossible for traders to imagine how the world will come out of the coronavirus pandemic. This gloominess regarding the deep economic downturn may weigh on Indian rupee, thus, unless 76.50 and 76 doesn't break on immediate basis we expect USD/INR spot to trade towards 77 and beyond levels," said Emkay's Gupta.
However, the falling oil prices is been seeing as beneficial to the rupee as it reduces India’s oil import bill. Brent crude gained 1.03% in today’s trade. May month’s oil futures slipped into negative territory as oil storage capacity in the US was up to capacity.
Nevertheless, the Indian rupee lost 6.89% in 2020, but seems to be faring better against some emerging market currencies such as the South-African rand and the Brazilian real that lost 25.26% and 24.20%, respectively.