The Indian rupee managed to end at a fresh record low of 71.58 per US dollar on Tuesday, owing to concerns on high crude prices and wariness among FPI investors for KYC norms. On Monday, it had closed at 71.21 per dollar.
The Indian rupee managed to end at a fresh record low of 71.58 per US dollar on Tuesday, owing to concerns on high crude prices and wariness among FPI investors for KYC norms. On Monday, it had closed at 71.21 per dollar.
The currency had staged a recovery to trade positively around 71.19 per dollar range, after hitting a record low of 71.37 in the early trade on Tuesday.
Most experts are penciling in a near-term target of Rs 72-73/USD for the rupee. Both local, as well as global factors, are weighing on the currency.
Globally, nagging concerns over rising crude oil prices and trade war continue to impact the forex market sentiment. Back home, the heightened risk associated with the swelling current account deficit due to rise in oil prices have contributed to the volatility.
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On Monday, the rupee closed to a record low of 71.21, down 22 paise from the Friday's close of 70.99, after hitting intraday low of 71.23.
Anand James Chief Market Strategist at Geojit Financial Services told Moneycontrol, "Rupee’s breach beyond 71 is not a surprise. The causative factors like the deficit, growth concerns, oil, FII outflows, etc. have been much commented on in the last few months."
"While the rupee took 8 months since the start of this year to depreciate from 64 to 71, the depreciation of 2013 from 53 to 68.8 happened in just 5 months."
"The ongoing depreciation has the room till 73, but the journey till there is less likely to be steep, as ongoing trade war tensions and a higher likelihood of only a gradual US rate hike will ensure that we may not have any runaway rally in US dollar or weakness in rupee. This suggests stocks’ dips on account of weak rupee will be an investment opportunity. But, only as long as oil doesn’t push above 80," he added.
According to Motilal Oswal report, the rupee consolidated in the higher range of 71 and 71.30 levels and today is expected to open at fresh record low levels following broad strength in the dollar and weakness in major Asian currencies.
On the domestic front, FPIs in India sought SEBI’s immediate intervention over its April 10 circular. The circular had asked FPIs to comply with KYC norms by December 31, 2018.
Economic numbers released last week were better-than-expectation that supported the rupee in the first half of the session but experienced selling in the latter half of the session. Today, USD-INR pair is expected to quote in the range of 70.70 and 71.30, it added.