The rupee weakened to a new low against the U.S. dollar on Tuesday as the greenback hit a 20-year high globally and domestic stocks suffered losses, dealers said.
The Rupee was trading Tuesday morning at 79.61 against the US Dollar against its close of 79.44 on Monday.
The U.S. dollar index, which measures unity against six major currencies, was at 108.42 this morning, down from 107.67 on Monday. The index was at levels last seen around August 2002, according to Bloomberg data.
As of 10:40 am IST, the BSE Sensex and NSE Nifty were trading down 0.3% and 0.4% respectively.
The dollar has strengthened lately as concerns over slowing global economic growth amid the energy crisis in Europe and aggressive rate hikes by the Federal Reserve have investors rushing to safety. US currency.
In 2022, the US dollar index has gained 13%. The rupee depreciated by 6.6% against the dollar over the same period.
The general strength of the dollar comes at a time when record outflows of overseas investment and high crude oil prices have made the outlook for India’s current account deficit unfavorable.
The Reserve Bank of India (RBI) has announced a series of measures to ease pressure on the rupiah, but forex traders forecast an unfavorable near-term outlook for the national currency amid global headwinds.
The RBI on Monday authorized the settlement of international trade in rupees, a move that could aim to facilitate transactions with Russia, analysts said. Last week, the central bank announced easing of foreign investments in government securities as well as sums raised abroad through external commercial borrowing.
“In the recent past, RBI has taken steps that could ease the pressure on the rupee vis-à-vis the country’s deficit. However, so far, the positive impact of the same has yet to translate into the USDINR pair due to the overwhelming gloom and global risk aversion environment,” said said Amit Pabari, managing director of CR Forex Advisors, in a note.
“Given fundamentals will likely keep pressure on the rupiah keeping the open upside firmly in place. in the short term,” he said.