1. Indian rupee falls nearly 16% in 2 years, will it cross 70-mark this year?

Indian rupee falls nearly 16% in 2 years, will it cross 70-mark this year?

Indian rupee plunged from 58.59 levels on May 26, 2014 when the Narendra Modi led NDA government took over to 67.71 levels on May 24, 2016.

By: | Updated: May 25, 2016 12:39 PM
Indian rupee vs US dollar Indian rupee vs US dollar: The currency plunged from 58.59 levels on May 26, 2014 when the Narendra Modi led NDA government took over to 67.71 levels on May 24, 2016, data available with the Reserve Bank of India showed. (Photo: Reuters)

Indian rupee which depreciated nearly 16 per cent in the past two years is unlikely to cross the 70-mark to a dollar in coming months. The currency plunged from 58.59 levels on May 26, 2014 when the Narendra Modi led NDA government took over to 67.71 levels on May 24, 2016, data available with the Reserve Bank of India showed. According to market experts, rupee depreciated mainly because of global reasons. However, things are looking stable back home.

Concern over US Federal Reserve lifting US interest rates coupled with pressure on emerging markets due to China yuan devaluation dampened market sentiments in the past two years.

Of late, a massive outflow of foreign funds on the back of stricter participatory notes (P-notes) and renewed possibility of the Fed raising interest rates as early as June further impacted Indian currency. On Tuesday (May 24), rupee continued to fell for the ninth straight day.

The Indian rupee on Wednesday was trading higher by 20 paise against the US dollar in early trade on fresh selling of the American currency by exporters and banks amid a higher opening in the domestic stock markets.

Naveen Mathur, associate director, currencies and commodities , Angel Broking, said, “If Federal Reserve raise interest rates in June, we may see some knee-jerk reaction. However, the rupee will stay in the range of 67.50-68 levels by December-end. It is very unlikely that it will cross 70-mark this year.”

In the past two years, the dollar index climbed 19 per cent to 95.56 on May 25, 2016 from 80.45 on May 26, 2014.

Madan Sabnavis, chief economist and general manager, Credit Analysis & Research said, “There are two set of reasons for rupee depreciation in the past two years. Fundamentally, current account deficit is improving and trade balance is looking better. So the current volatility in the Indian rupee is due to FII inflow. On the other hand, Federal Reserve interest rate hike worries and improvement in dollar index put rupee under pressure. We can see gradual depreciation in Indian rupee from here onwards and it can fell towards 68-69 levels in normal condition by December-end. If there will be sudden spike in crude oil price then it may cross 70-level this year.

In the past one year, foreign institutional investors (FIIs) offloaded Rs 16409.70 crore from the Indian equity markets.

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  1. R
    Rajan
    May 25, 2016 at 10:18 am
    GDP grew up by twisting the formula for calculation of GDP. Under the old formula, GDP growth is 5.5 % which is as good as UPA growth numbers. Currency has fallen by 16 %. PM claims we have stable inflation (when people don't eat), stable currency (in the night when currency market is closed) and good growth (when the formula is tweaked). Good marketing effort !!! There is no change in ground reality except saffron guys upping the arms.
    Reply
    1. T
      Topchi
      May 25, 2016 at 8:58 am
      Modi ji had promised 'Achhe Din Aane Wale Hain'. He didn't elaborate for whom Achhe Din? Is it for Dollar, VHP Bajrang Dal, RSS, Anupam Kher? or Kiran Bedi?
      Reply
      1. R
        rohan
        May 25, 2016 at 9:53 am
        So what ? Modi Sarkars GDP has grown much faster.
        Reply
        1. S
          Sachin
          May 25, 2016 at 10:38 am
          At the time independence (1947) 1 USD = 1 INR,in 1980 1 USD = 8 INR, in 1990 1 USD = 18 INR, in 2000 1 USD = 45 INR,in 2010 1 USD = 48 INR, in 2014 1 USD = 61 INR and in 2016 1 USD = 67 INR.From 1947 to 2014 most of the time Congress was in power and Modi Govt is for last 2 yrs. Now u think who has made this situation. Congress of Modi Govt.
          Reply
          1. S
            silver
            May 25, 2016 at 10:49 am
            august 2013 it was last 18 years low rupee 69 for a dollar.
            Reply
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