Rupee It touched a new all-time high of $79.38 in afternoon trade on Tuesday amid concerns about a strengthening dollar and widening of the country’s current account deficit. trade deficit Record highs were reached in June. The rupee also opened at 79.04 per dollar.
India’s domestic currency saw volatility with a fall on Tuesday. The rupee opened at 79.04 against the dollar on Monday compared to its previous close of 78.95. According to Interbank Foreign Exchange data, it touched a day’s high of 79.02 and day’s low of 79.38 during trading till 3.27 pm, which was also its all-time low.
Rating agency Nomura said in its report that analysts expect India’s current account deficit (CAD) to widen to 3.3 per cent of gross domestic product (GDP) in FY13, up from 1.2 per cent in FY12. , due to various factors such as the recent taxation policy. crude oil production. It also said that the rupee may fall to 82 against the dollar in the third quarter of 2022.
Since the last few months, the depreciating trend of the rupee is being seen. The local currency was at $73.77 a dollar on January 12, 2022 and since then it has fallen by more than Rs 5 to touch 79.16 on Tuesday. Experts say that the local currency is witnessing a fall in the last few months due to continued outflow of dollars due to exit of foreign portfolio investors (FPIs), costlier crude oil and higher dollar index.
foreign investors June continued its heavy selloff for the ninth consecutive month, dumping Indian shares worth Rs 50,203 crore during the month. This is the highest net outflow in two years.
Anindya Banerjee, Vice President (Currency Derivatives and Interest Rate Derivatives), Kotak Securities said, “The dollar-rupee spot ended 43 paise higher at 79.38 at a new all-time high. Strong selling in EUR-USD on bearish fears triggered a risk-off trend in global equities.The double whammy of weak equities and a strong US dollar index weakened the rupee against the US dollar.
Banerjee said that citing lower forward premium and premium on offshore derivatives onshore signals the termination of carry trade which is a major headwind for the rupee. “In the near term, we expect dollar-rupee to trade with an upward bias in the range of 79.00-79.80.”
The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose to 106.13 on Tuesday.
India’s trade deficit widened to a record $25.63 billion in June from $9.61 billion in June 2021, according to preliminary government data. In June, the country’s merchandise exports grew 16.78 per cent year-on-year to $37.94 billion, while imports grew 51 per cent year-on-year to $63.58 billion.
In May, the trade deficit during the month stood at $24.29 billion, up from $6.53 billion in May 2021. India’s merchandise exports grew 20.55 per cent year-on-year to $38.94 billion in May, while imports grew 62.83 per cent year-on-year during the month. -On-year $63.22 billion.
In the international market, the euro fell to a two-decade low on Tuesday as the latest jump in European gas prices added to concerns about a recession, while the dollar was holding up as US Treasury yields showed signs of a rebound. was staged, according to Reuters.
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