NEW DELHI: The rupee on Wednesday fell to an all-time low of 78.86 against the US dollar at the open. A few analysts said it is a matter of time till it touches the 79 mark.
The partially convertible rupee was trading at 78.94/95 per dollar. The currency closed at 78.77 on Tuesday.
“As equity markets decided that a recession isn’t good for stocks, after all, the Dollar index managed to unwind almost all of last week’s retreat in just one session. The dollar-yen exchange rate was back above 136 this morning, and the Indian rupee took a pasting to a new all-time low,” said Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA.
“Notably, US yields barely moved overnight so yen and rupee have no excuse on that front. It seems that markets are far more comfortable rushing into the apparent safety of the dollar at the first sign of trouble,” Halley said.
Anil Kumar Bhansali, Head of Treasury, Finrex Treasury Advisors said the rupee has headed to the 79 level much earlier than anticipated as the RBI withdrew its hands and with no sellers in the market of the dollar and no inflows.
“Today in the evening, we have the GDP data. The rupee seems to be now covering up its earlier slow depreciation and soon we could see a new figure of 80 added up to it. Most Asian currencies have today depreciated and with equities unable to give much relief, more depreciation is on the cards,” Bhansali said.
Exporters can now keep waiting with a stop loss of 78.75 while importers can just buy and buy more on dips if they get it, he added.
The dollar index, which tracks dollars against a basket of six major world currencies, edged 0.10 per cent lower to 104.40.
Data released overnight showed US consumer confidence fell sharply in June, following a decline in May, as concerns over high inflation left US consumers anticipating weaker economic growth in the second half of the year, the US Conference Board said overnight.
Sugandha Sachdeva of Religare Broking had on Tuesday said the market is assessing whether the US Fed will raise rates aggressively, as a response to runaway inflation, while there are rising risks of a hard-landing. “The focus would now be on the EU annual summit and OPEC + meeting that will provide further cues for the Indian rupee. A decisive breach of the 78.50 mark shall pave the way for further depreciation towards the 79.20 mark in the coming days,” she said.
Jigar Trivedi of Anand Rathi Shares felt the rupee may depreciate towards 80/81 levels by the year-end as twin deficits add to pressure on the emerging market currency. The Fed is expected to hike rates by 75 bps in the July meeting, while the RBI meeting is not due until August, which could narrow the yield differentials between India and US, and might further weigh down on rupee, he noted.
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