Rupee falls to new low against US dollar

107
2
Rupee falls to new low against US dollar

The rupee fell to a new low against the US dollar on Tuesday, as global crude oil prices went up 1 per cent, raising concerns over India's current account deficit and inflation, dealers said.

The domestic currency was trading at a new new low of 78.597 per US dollar against 78.34 per dollar at the previous close. The previous record closing low for the rupee was 78.39 per US dollar on June 22.

Crude oil prices went close to 1 percent in Asian trade on Tuesday after it said it is producing close to capacity, dampening hopes that the country could help increase crude oil supplies.

In the previous session, 08, or 0.9 per cent, was up to $116.17 a barrel, an increase of 1.7 per cent.

India imports more than 80 per cent of its oil needs, so the surge in the price of the commodity poses significant upside risks to the current account deficit.

The rupee has fallen by more than 5 per cent against the US dollar in 2022 due to higher US interest rates, the surge in oil prices and record overseas investment outflows from equities.

Dealers expect to intervene in the market through dollar sales of around 78.50 per dollar to rein in the rupee s depreciation.

Since the Ukraine war broke out in February, the market has intervened heavily in order to curb excessive volatility in the rupee. The headline reserves have declined by $40.94 billion since February 25.

It seems that intervention in spot, forwards and futures has failed to curb the rebound in the USDINR pair, amid worries, a widening deficit and overall risk-off mood, according to CR Forex Advisors MD Amit Pabari.

It will be interesting to see whether it will continue to be stable or bring in erratic moves after breaking RBI's threshold of 78.50 levels.