Rupee in danger of sliding past 80 vs US dollar as Indian currency hits new low today
- Rising crude oil prices, persistent FII selling is weighing on Indian rupee.
The Indian rupee today fell to a new record low against the dollar amid weakness in domestic shares. A rise in global crude prices also weighed on the domestic currency. The rupee fell to 78.68 against the US dollar at day's lows. On Monday, the rupee declined by 4 paise to close at its life-time low of 78.37 against the US dollar.
“Indian rupee spot notched a fresh record low against dollar index on 28th June, owing to continued sell-off in equity markets coupled with elevated crude oil prices, which might weigh down on the net importer's fiscal balance. Rising crude oil prices once again bring back concerns on the inflation front, which might prompt the central banks to be very aggressive in hiking rates and thereby inducing a recession," said Jigar Trivedi - Research Analyst- Commodities & Currencies Fundamental, Anand Rathi Shares & Stock Broker.
“Going forward, we expect the rupee spot to depreciate towards 80/81 levels by the year-end as twin deficits add to pressure on the emerging market currency. The Fed is expected to hike rates by 75 bps in the July meeting, while the RBI meeting is not due until August, which could narrow the yield differentials between India and US, and might further weigh down on rupee,” he added.
The dollar is up nearly 6% so far this year against the Indian rupee.
Oil prices rallied for a third day today as major producers Saudi Arabia and the United Arab Emirates looked unlikely to be able to boost output significantly while political unrest in Libya and Ecuador added to those supply concerns. Brent crude futures advanced $1.26, or 1.1%, to $116.35 a barrel, adding to a 1.7% rise in the previous session.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said financial markets are trying to gauge the extent of the growth slowdown in the US, which is already underway. “One view is that since the Fed policy will be data dependent, the Fed might go slow on rate hikes and QT if incoming data allows that. The decline in metal prices is a positive development from this perspective. But Brent crude again rising above $ 116 is a negative.”
Persistent selling by FIIs in the domestic markets is also putting pressure on the rupee. Foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth ₹1,278.42 crore, as per stock exchange data.
Rahul Kalantri, VP Commodities, Mehta Equities, expects rupee to remain volatile this week. “Rebound in the crude oil prices and talks of more economic sanctions on Russia pushed the rupee lower. Persistent selling by FIIs in the domestic markets is also putting pressure on the rupee. Further economic sanctions on Russia may drive global energy prices higher and put pressure on emerging market currencies.” (With Agency Inputs)
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Business NewsNewsIndiaRupee in danger of sliding past 80 vs US dollar as Indian currency hits new low today
First Published:28 Jun 2022, 11:31 AM IST
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