New Delhi [India], August 5 (ANI): The Indian rupee depreciated versus the US dollar on Monday to touch its all-time low, tracking global heavy selling in stock markets, over risks that the US may potentially slip into recession.
At 12.18 pm, at the time of filing this report, the Rupee traded at 83.85 versus Friday’s closing of 83.75. It opened at 83.78, surpassing the previous lifetime low of 83.7525 from Friday.
Analysts say that the Rupee’s fall is in line with the weakness in the global market, US recession fears, and add to it the geopolitical tensions.
“U.S. recession concerns led to worries about foreign outflows from India and emerging markets,” said Mumbai-based Ajay Kedia of financial services firm Kedia Advisory.
“The fall is attributed to concerns over a potential U.S. recession, which has spurred worries about foreign outflows from India and other emerging markets. The selloff in U.S. and Asian equities, following a disappointing U.S. jobs report, has intensified these concerns, causing significant market jitters,” Kedia said in a report.
The weak U.S. jobs report released on Friday showed that the economy added only 114,000 jobs in July, significantly below market expectations of a 175,000 increase. Additionally, the unemployment rate unexpectedly jumped to a high of 4.3 per cent, and wage growth slowed more than anticipated.
Kedia said the Reserve Bank of India might allow USD/INR to move higher to 83.90. He sees support at 83.45, and resistance at 83.95; and breaking 83.95 could push it to 84.10/84.20.
Jamal Mecklai, a veteran in the financial market, said, “US recession fears, equity market collapse would create a risk-off sentiment. Equity decline could be quite serious and could last for a long time. So the rupee will naturally take some pressure.”
In 2022-23, the Indian Rupee was in the news cycle for a considerable part, though not for good reasons. Monetary policy tightening by various central banks to contain inflation, the war in Ukraine leading to price rise for crude oil and subsequent realignment in the global energy supply chain, and strengthening of the US dollar index kept the Indian currency under pressure.
Since then, the rupee has been off the news cycle, as it traded largely steady months thereafter.
In 2022, the Rupee depreciated over 11 per cent on a cumulative basis, data showed. It breached the 83-mark against the US dollar in mid-October, to hit an all-time low.
RBI’s possible intervention in the forex market to stabilize the rupee seemed to have yielded results. Typically, the RBI from time to time intervenes in the markets through liquidity management, including through the selling of dollars, with a view to preventing a steep depreciation in the rupee.
The RBI closely monitors the foreign exchange markets and intervenes only to maintain orderly market conditions by containing excessive volatility in the exchange rate, without reference to any pre-determined target level or band. (ANI)
This report is auto-generated from ANI news service. ThePrint holds no responsibility for its content.