The rupee depreciated 22 paise to a record low of 78.59 against the U.S. dollar in early trade on Tuesday as continuing foreign funds outflows weighed on investor sentiments. At the interbank foreign exchange, the rupee opened on a weak note at 78.53 against the American dollar, then lost ground to quote at 78.59 its all-time low level, registering a fall of 22 paise from the last close. Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.01% lower at 103.92.
“Indian rupee opened at new life low as a risk-sentiments retreat while crude oil prices gained on supply worries. Today is the last day of quarterly adjustment and as we all know RBI has aggressively intervened in the forward and futures market, so there is a high chance of the rupee depreciating in the first half while stabilizing in the second half. Spot USDINR is having resistance at 78.80 and support at 78.40,” said, Dilip Parmar, Research Analyst, HDFC Securities.
“Going forward, we expect the Rupee spot to 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,” said, Jigar Trivedi, Research Analyst, Commodities & Currencies Fundamental, Anand Rathi Shares & Stock Brokers.
Rahul Kalantri, VP Commodities, Mehta Equities said, “We expect the dollar index to remain volatile this week and expect to trade in the range of 103.20-104.70. Persistent selling by FIIs in the domestic markets is also putting pressure on the rupee. Further economic sanctions on Russia may drive global energy prices higher and put pressure on emerging market currencies. We expect the rupee to remain volatile this week and could cross 78.55 levels.”