The currency continues to depreciate due to global equities market weakness and a strong dollar
The rupee fell to a new all-time low against the dollar early on Monday, trading beyond Rs 77.40 per dollar, as investors sought safety amid Chinese lockdowns, conflict on the boundaries of Europe, and worries of increased interest rates.
The currency continued to depreciate amid weakness across global equity markets and a strong dollar. The rupee started at 77.06 versus the U.S. dollar and dropped further to 77.53, down 0.78 per cent compared to its Friday closing. It recovered modestly afterwards. The previous record closing low for the currency was 76.97, recorded on March 7, 2022.
Rupee to fall further as per experts
According to experts, the rupee may continue to trade sluggish due to a strong dollar and predictions of aggressive rate hikes by the US Federal Reserve to combat inflation.
The rupee is projected to remain under pressure due to rising crude oil prices and broader global uncertainty, according to IFA Global Research.
RBI’s protective approach results in currency reserves’ decline
The Reserve Bank of India (RBI) has been guarding the rupee, as per IFA Global Research, resulting in a decline in currency reserves. Forex reserves dipped to $597.73 billion for the week ending April 29 from $617.65 billion a month earlier, according to the latest RBI statistics.
According to ICICI Securities’ research division, the US dollar continued to rise amid risk aversion in global markets and a climb in US Treasury rates. After the United States’ non-farm payroll statistics showed the economy gained 428,000 jobs in April, above market expectations, yields continued to rise. The currency also fell as crude oil prices rose, according to ICICI Securities.
Congress slams Centre on Inflation
The main Opposition party, India National Congress has slammed the Bhartiya Janata Party-led Central government over the rising inflation and depreciation of the rupee.
Congress leader Randeep Singh Surjewala, while reacting to the rupee’s slump versus the dollar, remarked that the rupee is in ‘ICU’ for the first time in 75 years.
In his tweet in Hindi, the Congress leader said, “Today in the history of India: Rupee is in ICU, NPA is highest in 75 years, highest unemployment, inflation has broken the back, the most expensive is petrol and diesel.”
While taking a dig at the BJP, Surjewala added that all this is possible only because Narendra Modi is at the helm of affairs in the country.