the Indian Rupee The dollar fell to a record low on Friday amid a strong and steady fall. foreign money outflow from the local market and the rise in global crude oil prices. The domestic currency opened at 78.98 and settled at a new all-time low of 79.12 (provisional) against the US dollar. The currency has depreciated around 6 per cent in the current financial year. The domestic unit was trading at $79.09 per dollar, down 0.15 per cent from the previous close of $78.98 per dollar at 0920 hours on July 1.
Global oil prices rose on Friday as OPEC+ said it would stick to its planned oil output hike in August. Earlier, OPEC+ decided to increase production by 648,000 barrels per day (bpd) each month in July and August, adding 432,000 bpd per month from the previous plan. Oil prices skyrocketed due to tight supplies and worries that the conglomerate has little ability to increase production. The sharp jump in crude oil prices raised concerns over the economic slowdown.
The US dollar was on track for its best week in a month. The dollar index, which measures the currency against six counterparts, was up 0.07 per cent in Asian trading. The greenback has gained 0.66 per cent amid fears of a global recession. Investors will eagerly follow US ISM manufacturing data due later in the day.
“The Indian rupee has been adversely impacted mainly by FII withdrawals from the equity market, rising crude oil prices, deteriorating trade balance and strengthening of the dollar,” analysts at Emkay Wealth Management said in a note. Net outflows from equities by foreign portfolio investors (FPIs) reached Rs 2.13 lakh crore so far in 2022, data showed.
Rupee Outlook: Will it touch 80 per US dollar soon?
“Going forward, we may see the rupee spot depreciating to 80.5/81 levels by the end of the year,” said Jigar Trivedi, Research Analyst, Commodity and Currency Fundamentals, Anand Rathi Shares & Stock Brokers.
A rise in crude oil prices may impact the net importer’s trade deficit after a record high deficit of $24.29 billion in May. Meanwhile, the US Federal Reserve’s easing of the interest rate differential between central banks set for a 75 bps hike in July could increase capital outflows, adding pressure to the capital account. While RBI may intervene in forex markets to contain losses, it is unlikely to draw a line in the sand, as fundamentals remain weak,” said Jigar Trivedi – Research Analyst, Commodities & Currency Fundamentals, Anand Rathi Shares & Stocks Brokers said.
“The rupee remains under pressure due to a fresh stance by global central banks. We expect the rupee to remain volatile in today’s session and retain its key support level of 79.55,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
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