Reported By: Mohammad Haris
Last Updated: September 06, 2023, 17:04 IST
Rupee vs Dollar: The rupee on Wednesday, September 6, declined 10 paise to touch an all-time low of 83.14 against the US dollar. Experts said a strong dollar, rise in crude oil prices and FPI outflows mainly contributed to the rupee’s fall. They also said not only the rupee, other Asian currencies also declined with the Chinese Yuan hitting 7.32 against the dollar.
At the interbank foreign exchange market, the local unit opened at 83.08 against the US dollar and moved in a range of 83.02 to 83.18 in the day trade. The rupee finally settled at 83.14 (provisional) against the US dollar, down 10 paise from its previous close.
The Indian currency earlier hit its lowest level of 83.13 on August 21 this year. On Tuesday, the rupee plunged 33 paise to close at 83.04 against the US dollar.
Why Has Rupee Hit All-Time Low?
Anil Kumar Bhansali, head (treasury) and executive director of Finrex Treasury Advisors LLP, shared a few reasons why the Indian rupee has closed at all-time low:
Rise In Dollar: The US dollar rose to the highest levels in six months. The dollar index has risen to 104.78 from 104 levels about a week ago and a rise in US 10-year yields to 7.26 per cent with market speculation on the US Fed rate hikes.
Rise In Crude Oil Price: Elevated crude oil prices also weighed on the rupee. The rise in oil prices to $90 is increasing India’s trade deficit and current account deficit (CAD) and with oil companies buying dollars continuously, keeping the demand for the dollar up.
FPI Outflows: FPIs looking at high market valuation of equities are booking profits and taking money out of the country. The last two days have seen almost Rs 5,000 crore of FPI outflows from equities.
Other Asian Currencies Falling: Other Asian currencies have also fallen, with Yuan touching 7.32 against the dollar as interest rate differential between the US and China increases and an economic slowdown in China is seen. “To remain competitive, the Indian currency needs to depreciate to some extent,” Bhansali said.
Panic: Panicky importers have joined the bandwagon of dollar buying with inflows tapering down to quite an extent.
Anuj Choudhary, research analyst at Sharekhan by BNP Paribas, said, “Brent crude breached the $90/barrel mark. US dollar gained on safe-haven demand amid concerns over global economic slowdown after China’s Caixin Services PMI fell to an 8-month low at 51.8 in August vs forecast of 53.6.”
He said the rupee is expected to trade with a negative bias on risk aversion in global markets and a strong US dollar.