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Rupee drifts down to a new record low

The dollar index, which measures the greenback’s strength against a basket of six currencies, was ruling at 104.82 on Wednesday; since the start of 2022, it has gained around 10%.

indian rupee

The rupee on Wednesday drifted down to another record low as it closed at 78.9662 to the dollar, pressured by a strong American currency, continuing portfolio outflows and elevated prices of crude oil. The Indian currency, which slipped to 78.9837 in intra-day trades, has lost more than 6% since January.

The dollar index, which measures the greenback’s strength against a basket of six currencies, was ruling at 104.82 on Wednesday; since the start of 2022, it has gained around 10%. Dealers said the Reserve Bank of India (RBI) had intervened in the market on Wednesday.

Experts have noted the rupee could depreciate further since the dollar is expected to remain strong as the US Fed resorts to rate hikes and quantitative tightening to tame inflation, now running at multi-decade highs. Worries about rising inflation and a widening current account deficit would weigh on the currency.

The strengthening dollar has seen several currencies, including the Japanese yen and the Chinese renminbi losing value. Foreign portfolio investors continue to sell Indian stocks; they have taken home close to $6.4 billion in June alone, having been sellers in every month since October, 2021 and offloading stocks worth
$33.37 billion.

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