Rupee breaks down to a record low of 79.36, know how far it is likely to fall
Indian rupee
Highlights
- Rupee sentiment hit by continued outflow of foreign investors
- Rupee touched the lowest level of Rs 79.38 during trading
- According to Bank of America, Indian Rupee may break up to 81 per dollar
American The rupee on Tuesday closed at its all-time low of 79.36 per dollar against the dollar. The weakening of the dollar overseas and continued withdrawal of foreign institutional investors from capital markets weighed on the rupee’s sentiments. The rupee opened at 79.04 in the interbank foreign exchange market. During trading, it touched a high of Rs 79.02 and a low of Rs 79.38. At the end of trading, the rupee closed down by 41 paise at Rs 79.36 per dollar (tentative) against its previous closing price of Rs 78.95 per dollar.
Strengthening of dollar increased weakness
Anuj Choudhary, Research Analyst, Sharekhan by BNP Paribas, said the Indian rupee touched a new record low against the US dollar on Tuesday due to a strengthening dollar and weaker than expected domestic economic data. The dollar index, which gauges the strength of the dollar against the world’s six major currencies, rose 0.89 per cent to 106.07.
How far can the rupee break?
According to Bank of America, the Indian rupee may break below 81 per dollar by the end of the year due to rising crude oil and commodity prices. The Indian rupee has depreciated over 6% so far this year. The rise in crude oil prices has acted to weaken the rupee. India imports about 80% of its crude oil requirement.
What is the effect of weakness in rupee?
India imports everything from oil to essential electric goods and machinery along with other gadgets including mobile-laptops. Due to the weakening of the rupee, a higher amount has to be paid on the import of these items. Due to this, the price of these items in the Indian market will increase. At the same time, India also imports crude oil. This will also make the import of crude oil expensive. This means that the price of crude oil may increase in the coming days. India buys 80 per cent of its crude oil requirement from abroad. Its payment is also done in dollars and due to the cost of dollars, the rupee will cost more. Due to this, freight will be expensive, due to its effect, inflation will be hit further on everything needed.
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