28 Jun , 2022 By : Monika Singh
The Indian Rupee slumped over 20 paise to hit a new lifetime low of 78.59 per dollar on Tuesday after closing at record lows in the previous four trading sessions, tracking weakness in global markets. Rebound in oil prices after last week’s rout also put pressure on the local unit. At the interbank forex market, the rupee opened on a weak note at 78.53 against the dollar, then lost ground to quote at 78.59 — its all-time low level, registering a fall of 22 paise from the last close. Fear of a global recession, strengthening dollar, continuing foreign fund outflows have kept the domestic currency under pressure for the last few weeks now.
“Indian rupee opened at new life low as risk- sentiments retreat while crude oil prices gained on supply worries. Today is the last day of quarterly adjustment and as we all know RBI has aggressively intervened in forward and futures market, there is a high chance of the rupee depreciating in the first half while stabilising in the second half. Spot USDINR is having resistance at 78.80 and support at 78.40. The view for USDINR remains bullish till it sustains above 77.87, the low of June 20,” said Dilip Parmar, Research Analyst, HDFC Securities.
The biggest factor which drags currency lower is foreign fund outflows and a risk-averse environment. So far this year, we have seen capital outflows of around $28 billion from the equities and $1.7 billion from the debt market. The growing concerns about higher inflation forced global central banks to hike interest rates and roll back liquidity which adversely impacted risk sentiments and supported haven dollar demand, according to Parmar. “There could be more pain in the near term but we do not expect sharp depreciation like other Asian peers,” he added.
“We expect the dollar index to remain volatile this week and expect to trade in the range of 103.20-104.70. 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. We expect the rupee to remain volatile this week and could cross 78.55 levels,”
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