Runaway inflation in many economies, sell-off by FPIs in Indian equities, and fears of crude prices taking a U-turn northwards are piling pressure on the rupee
The Indian currency has weakened 9.5% so far this year, with the central bank defending the rupee via dollar sales that have depleted its forex reserves to $545 billion from the peak of $642 billion a year ago.
The rupee depreciated 43 paise to an all-time low of 81.52 against the US dollar in early trade on Monday as the strengthening of the American currency and risk-averse sentiment among investors weighed on the local unit.
The rupee on Monday dropped to a record low of 81.5775 as the dollar index raced to its highest level since May 2002 and the British pound tumbled.
The rupee hit a record low of 81.5525 per dollar, down from 80.99 in the previous session.
This was the seventh out of eight sessions when the currency dropped and lost over 2.51% in this period. So far this year, it fell around 8.48%.
The rupee opened at a record low of 80.2850 per U.S. dollar, down from 79.9750 in the previous session.
The comments come against the backdrop of aggressive rate hikes from the U.S. Federal Reserve, which raised rates by 75 basis points overnight, vowing to battle to beat down inflation.
SBI says the RBI authorises all banks in India, including SBI, to open special Rupee Vostro account to promote invoicing in rupee
Anantha Nageswaran further said that the rupee is being managed in a manner that reflects the fundamentals of the economy.
Piyush Goyal also said that exporters should not be dependent on a depreciating rupee and they should stand on their own based on the quality of products and ability to serve the needs of customers in the global markets.
Sinking with other emerging currencies against a strong dollar, the rupee has hit rock-bottom multiple times this year and weakened over 7% in 2022.
At the interbank foreign exchange market, the rupee opened at 79.55 against the greenback, then fell further to 79.66, registering a decline of 14 paise over its last close.
"The RBI is likely to intervene at key levels such as 80," Kunal Kundu, economist at Societe Generale, wrote in the note.
The build-up in reversible flows over the past few years suggests a possible vulnerability in our currency market positioning, which merits monitoring
India's balance of payments, a measure of how much the country relies on money from abroad, has been squeezed by a record trade deficit that has prompted economists to revisit their current account deficit and balance of payments (BoP)projections.
However, losses in the domestic stock markets weighed on the local unit and restricted the gain, forex traders said.
At the interbank foreign exchange, the rupee opened at 79.75 against the US dollar, then fell to 79.76, registering a decline of 12 paise over the last close.
The rupee is tipped to open around 79.75 per U.S. dollar in initial trades compared with 79.6725 in the previous session.
At the interbank foreign exchange, the rupee opened at 79.60 against the US dollar, then fell to 79.68, registering a decline of 23 paise over the last close.
Besides, a positive opening in the domestic equities amid moderating inflationary pressures boosted investor sentiments, according to forex dealers.
A political and economic shift away from China is taking hold. As we celebrate the 76th Independence Day, India is at a vantage point to seize this once-in-a-generation moment
At the interbank foreign exchange, the rupee opened at 79.67 against the US dollar and lost further ground to 79.71, registering a decline of 9 paise over the last close.
The Reserve Bank of India took several steps to mitigate the rupee’s woes, and even though the currency has weakened, the RBI has ensured that the rate of decline has been arrested