The Indian Rupee on Friday fell below the 79 mark against the US dollar for the first time to hit a fresh record low amid unabated foreign fund outflow from the Indian markets and a surge in crude oil prices. Foreign institutional investors have offloaded equities worth around $28 billion so far this year, putting pressure on the local unit. The domestic currency opened at 78.98 and hit a fresh record low of 79.12 a dollar. In the last few sessions rupee has been under pressure but volatility has been curtailed following active RBI intervention. Finance Minister Nirmala Sitharaman on Thursday allayed rupee depreciation concerns saying, “We are relatively better placed. We are not a closed economy. We are part of the globalised world. So, we will be impacted.”
USDINR(Spot) to trade with a positive bias and quote in the range of 78.70 and 79.20
Most of the Asian currencies have been weighed down as there remains a risk that the aggressive Federal Reserve rate hike outlook could slow down the economy. “Yesterday, the dollar gained traction despite U.S. consumer spending rising less than expected in May. Consumer spending, accounts for more than two-thirds of U.S. economic activity, gained 0.2% in May, the smallest rise in five months. Today, focus will be on the manufacturing PMI data that will be released from the US, Euro zone and the UK. Better-than-expected data from the US could extend gains for the dollar in the latter half of the session today. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 78.70 and 79.20,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
Bets for further depreciation in rupee stronger
Amit Pabari, MD, CR Forex Advisors said, “The fundamental risk factors remain intact as India sees the biggest FII losing streak, higher oil prices above $110/bl, hawkish Fed, rising trade deficit etc. In the past two trading sessions, USDINR has resisted moving beyond 79.00 levels as possibly the month-end demand for Dollars was fulfilled and now the markets are waiting for further cues. Consecutively, on the downside, it is not moving below 78.85 which is confirming further upside trend and importers buying near those levels. Overall, the bets for further depreciation in rupee are stronger with RBI’s action being noticed on every move. We expect the rupee to trade between 78.80- 79.20 in the short term before it slowly and gradually declines further.”