Rupee edges closer to 82 against US dollar, again falls to record lows
Premium- Rupee-US dollar rate today: Without the dollar index and the Treasury yields stabilising, it is highly difficult to place a floor for the rupee, say traders
The rupee today hit a fresh low when the Indian currency approached closer to 82 levels against the US dollar. The rupee fell to 81.90 against the US dollar amid elevated US bond yields and firm US dollar. On Tuesday, the rupee had settled 14 paise higher at 81.53 against the US dollar, after touching a record low of 81.6525 on Monday.
Analysts say that without the dollar index and the Treasury yields stabilising, it is highly difficult to place a floor for the rupee. The 10-year U.S. Treasury yield today topped 4% for the first time since 2010. The dollar index climbed to multi-year highs of 114.68. Domestic equities fell sharply today amid FII outflows in recent sessions. The Sensex was down over 400 points.
Also, in setback for rupee, a Reuters report said that the India's bond inclusion into the JPMorgan emerging market index could be delayed to next year.
“Stock markets across the globe are extremely concerned that the Federal Reserve's war against decades-high inflation could push the U.S. economy into a downturn and have a spill-over effect on other economies too. Sentiment at Dalal Street also remains clouded by lingering concerns over corporate India’s earnings which could come under heavy pressure from inflation, an economic downturn, and soaring interest rates. Also, FIIs have been deserting local equities in recent sessions could also dent market sentiment. The street is now anxiously awaiting the RBI September MPC Meet outcome to trickle in on Friday," said Prashanth Tapse - Research Analyst, Senior VP (Research), Mehta Equities Ltd.
IFA Global expects rupee to today in the range of 81.60-82.00 intraday with weakening bias.
CFA Global in a note said all eyes are now on RBI. “On the flow side, there has been notable FII outflow (almost Rs. 10,000 crores) since Fed’s rate hike day. Surely, RBI will have to closely monitor the situation. If not today or tomorrow, then the expectation of direct or indirect intervention will rise on the Policy day- that is on 30th September. Overall, we expect the pair to head higher towards 82.50-83.00 over the near term. On the contrary side, 81 and 80.50 will act as a strong support level," the forex advisory firm said in a note.
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