Indian Rupee Depreciates to Lifetime Low of 83.29 Against US Dollar
The Indian rupee faced a fourth consecutive day of depreciation, settling at a new lifetime low of 83.29 (provisional) against the US dollar on Monday. This decline was primarily attributed to the prevailing risk aversion in global markets and the surge in crude oil prices. Additionally, the strength of the American currency against major rivals abroad and a negative trend in domestic equities weighed heavily on investor sentiments, according to forex traders.
Key Highlights
Here are the key highlights of the rupee’s performance:
| Date | Rupee vs. Dollar |
|---|---|
| Monday | 83.29 (Provisional) |
| Friday | 83.16 |
On Monday, the domestic unit opened at 83.09 against the dollar and traded in the range of 83.09 to 83.30 against the greenback. The rupee finally closed at the record low of 83.29 against the dollar, marking a 13-paise decline from its previous close. This followed a 13-paise fall on the previous Friday.
The dollar index, which measures the strength of the US dollar against a basket of six currencies, marginally decreased by 0.11 per cent to 105.20. In the global oil market, Brent crude futures, the benchmark for oil prices, traded 0.42 per cent higher at USD 94.32 per barrel.
Dilip Parmar, a Research Analyst at HDFC Securities, attributed the rupee’s decline to risk-averse sentiments and the rally in crude oil prices. He stated, “This week will remain highly volatile following a series of central bank policy rate meetings across the developed and emerging market economies. The baseline of it is the dollar to hold onto its strength through the week.” In the near term, the spot USD/INR is expected to surpass the record high and may reach a level between 83.50 and 83.70, while maintaining support at 83, Parmar added.
Impact on Domestic Equity Markets
In the domestic equity market, the BSE Sensex closed 241.79 points or 0.36 per cent lower at 67,596.84 points, while the broader Nifty declined by 59.05 points or 0.29 per cent, ending at 20,133.30 points.
Factors Contributing to Rupee Depreciation
Forex traders pointed out several factors contributing to the depreciation of the rupee:
- Elevated Crude Oil Prices
- Strong US Dollar
- Foreign Fund Outflows
- Widening Trade Deficit
India’s exports witnessed a decline of 6.86 per cent to USD 34.48 billion in August this year compared to USD 37.02 billion in the same month last year, as per government data released on Friday. Imports also recorded a decline of 5.23 per cent to USD 58.64 billion from USD 61.88 billion in August 2022.
Meanwhile, India’s forex reserves decreased by USD 4.992 billion to USD 593.904 billion for the week ending September 8, as reported by the Reserve Bank of India on Friday. In the previous reporting week, the reserves had risen by USD 4.039 billion to USD 598.897 billion.
This news article has not been edited by Smartkhabrinews staff and is published from a syndicated news agency feed – PTI.