The value of the Indian Rupee tanked to a record low against the dollar on Friday in the light of the strengthening dollar, constant flow of foreign funds out from the domestic market, global surge in fuel prices, etc. The rupee opened at 78.98 and plunged to a record low of 79.12 against a US Dollar. If we assess the performance of the Indian Rupee against the USD in this financial year it has almost lost 6 per cent of its value. On July 1, after the opening, the rupee traded at 79.09, 0.15 per cent down from the opening of 78.98 against the dollar.
Events Affecting Indian Rupee
As The Organisation of the Petroleum Exporting Countries, OPEC announced its plan in favour of hiking the prices as forecasted before in August the Global fuel prices surged. Previously, OPEC chose to hike the number of barrels per day to 648,000 for July and August as compared to the previous number of 432,000 barrels per day per month. Oil prices rocketed after seeing the trouble in the output capacity of fuel
An analyst of Emkay Wealth Management wrote in a note,” The Indian Rupee has been adversely affected mainly by the FIIs pulling out funds from the equity market, rising crude prices, the deteriorating trade balance and dollar strengthening.”
What To Expect Further? Will the Rupee Will Hit 80 In the Near Future?
Jigar Trivedi at Anand Rathi Shares & Stock Brokers said, “Going forward, we might see the Rupee spot depreciating towards 80.5/81 levels by the year-end, owing to the widening of twin deficits.”
Further said, “Rising crude oil prices might continue to weigh down on the net importer’s trade deficit, after rising to a record high deficit of $24.29 billion in May. Meanwhile, narrowing interest rate differentials amid hawkish central banks across the horizon with the US Federal Reserve ready to hike 75 bps in July might amplify the capital outflows, adding pressure on the capital account. Though RBI might intervene in the forex markets to curb the losses, it’s unlikely to draw a line in the sand, as fundamentals remain weak.”
Rahul Kalantri at Mehta Equities Ltd. said, “Hawkish stance of the global central banks continues to put pressure on the rupee. We expect the rupee to remain volatile in today’s session and could hold its key support level of 79.55.”