Markets

Rupee hits 71 on oil price, dollar demand

The rupee on Friday hit the psychological mark of 71 against the U.S. dollar for the first time as month-end dollar demand from importers continued amid inching up of crude prices.

The rupee opened at 71 to the dollar as compared with Thursday’s closing of 70.74, prompting the Reserve Bank of India to intervene, currency dealers said. This allowed the currency to cut losses but slumped again towards the end of the trading session to close the day at 71 to a dollar. The decline amounted to 26 paise, or 0.37%, on Friday.

“Emerging market currencies are under pressure and this has weighed on the rupee too. The dollar index continues to remain higher on expectations of aggressive interest rate hike by the Federal Reserve,” said Rushabh Maru, analyst at Anand Rathi Shares and Stock Brokers. On Friday, the Indonesian rupiah slid to a two-decade low — its lowest since the Asian financial crisis of 1998.

Experts said the RBI had not been intervening aggressively to defend the rupee, which has depreciated more than 9% against the dollar in 2018. “On the domestic front, the intensity of RBI’s intervention has dissipated. While there is complete lack of communication from the RBI, comments from officials from the government and quasi-government agencies give the impression that they support this fall in the rupee’s value in the interests of competitiveness,” said Abheek Barua, chief economist, HDFC Bank.

Worst performer

The rupee is the worst performer among emerging market Asian currencies.

The depreciation bias and momentum would continue in the near term which has implications for exporters, importers and borrowers in foreign exchange, he added.

Mr. Barua said he sees the depreciation bias and momentum continuing in the near term, which has implications for exporters, importers and borrowers in foreign exchange.

“This momentum could dissipate if not reverse suddenly and the way to ‘play’ the rupee market in the near term is through continuous monitoring of this momentum bias,” Mr. Barua noted.

The fall also weighed on the equity markets as the Sensex lost 45.03 points to close at 38,645.07 with 14 of its constituents ending in the red. Index heavyweights such as Reliance Industries, Maruti, ICICI Bank and HDFC Bank lost ground.

The Nifty of the NSE settled the day at 11,680.50, down by a marginal 3.7 points.

 


Our code of editorial values

This article is closed for comments.
Please Email the Editor

Printable version | Oct 6, 2022 9:57:08 pm | https://www.thehindu.com/business/markets/rupee-sinks-to-71-mark-on-high-crude-oil-dollar-outflows/article24834259.ece