As the Indian market continues to watch foreign investment outflowThe Rupee It has touched its record lows several times in the past few months. Apart from FPI outflows, the reason for the fall in the rupee is a rise in the dollar index and costlier crude oil. Experts said the rupee will face challenges in the coming few months and may touch 80 against the US dollar in the medium term.
Rupee has been falling continuously for the last few months. The rupee was at 73.78 a dollar on January 12, 2022 and since then it has fallen by over Rs 5 in less than six months and touched its all-time low of 79.11 on Friday. However, the decline has not been consistent since January 12. First it weakened to 77.13 between January 12 and March 8, and then strengthened for a month till April 5 to reach $ 75.23 per dollar. Since April 5, the rupee has seen a steady decline and has touched all-time lows several times since then.
Anindya Banerjee, Vice President (Currency and Interest Rate Derivatives), Kotak Securities said, “Even though the Indian rupee is trading at an all-time low against the US dollar, when compared to a group of currencies, the rupee has been one. Modest outperformer: RBI’s aggressive intervention and interest rate hike has helped the rupee.
Why is it falling?
Foreign investment outflow is a major reason for the fall in the rupee, which has been aggravated by global uncertainties arising out of the geopolitical crisis caused by the Russo-Ukraine war and tighter monetary policy by the US Federal Reserve. The decline is also attributed to a rise in crude oil prices and a general strengthening of the dollar.
FPIs have been continuously withdrawing money from the Indian equity market since October 2021. The net outflow of foreign portfolio investors (FPIs) from equities so far this year has touched Rs 2.13 lakh crore. During the month till June 24, foreign investors made a net withdrawal of Rs 45,841 crore from equities.
Kotak’s Banerjee said, ‘in economic development’ India But global market turmoil and the rapid pace of Fed hikes have kept big money from investing in India.
Crude oil also remains above $100 per barrel. On Friday, Brent crude futures closed at $111.63 a barrel, up $2.60, or 2.4 per cent. West Texas Intermediate crude (WTI) closed at $108.43 a barrel, up $2.67, or 2.5 percent.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, also traded higher at 105.13.
“We expect dollar index to remain strong and maintain support level of 103.55 on closing basis,” said Rahul Kalantri, Vice President (Commodities), Mehta Equities.
International higher commodity prices due to supply disruptions due to the Russo-Ukraine war also took a toll on the rupee as costlier imports require more dollars, which strengthens the US currency and weakens the Indian currency in comparison. makes.
Asked about the impact of the rupee depreciation on Indians going abroad, Banerjee said as long as the rate of depreciation of the rupee remains slow, it should not have a significant impact on Indian students going abroad for studies.
Rupee may touch 80 level in few months
Banerjee said in the next 6-9 months, the rupee is expected to face challenges from the slowdown in the global economy, lack of US dollar liquidity and higher oil prices. “But, we expect RBI to keep the rupee stable. However, if the dollar continues to appreciate globally, the dollar-rupee will also move higher, possibly towards the 80 level.
Kalantri of Mehta Equities said the tight stance by global central banks is keeping the rupee under pressure.
read all breaking news, today’s fresh newswatch top videos And live TV Here.