Indian rupee closes at new low of 79.59 against U.S. dollar

The Indian rupee (INR) decreased further on Tuesday against the U.S. dollar and hit a new low of 79.66 before closing the day at 79.60. The Indian rupee has lost a little over 7% for the year. On the one hand, the rising dollar is weighing on the rupee, and on the other, the continuous pullout by foreign investors is impacting the local currency. The recent fall in crude oil prices has not really helped INR to stay steady, let alone gain against the greenback.

While the Brent crude prices have fallen by about 11 percent to around $102 a barrel since the end of May, the net outflows of the FPIs (Foreign Portfolio Investors) are $503 million in July so far, as per NSDL (National Securities Depository Ltd) data. The total net outflows in 2022 so far stand at $30.2 billion. On the other hand, the dollar index (DXY) continues to surge. On Tuesday, it registered a new high of 108.56, the highest in almost two decades.

Reserve Bank of India’s (RBI) announcement that international trade settlement can be carried out in the Indian rupee with immediate effect will allow importers and exporters to settle their trades in INR. But how far it will impact the rupee positively has to be seen because the exchange rate of INR against other countries’ currency will be determined by the market.

Rising dollar and the sell­off of FPIs in the domestic market has been impacting the rupee negatively and it is expected to remain so at least in the short term. The charts, too, indicate the possibility of INR falling further. Overall, we expect the rupee to be bearish and it will most likely touch 80 in a week or two.

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