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Rupee weakens past 79 to new low versus dollar

FILE PHOTO: Yang Mei Hu oil products tanker owned by COSCO Shipping gets moored at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia June 13, 2022. REUTERS/Tatiana Meel/File Photo

FILE PHOTO: Yang Mei Hu oil products tanker owned by COSCO Shipping gets moored at the crude oil terminal Kozmino on the shore of Nakhodka Bay near the port city of Nakhodka, Russia June 13, 2022. REUTERS/Tatiana Meel/File Photo | Photo Credit: TATIANA MEEL

The rupee plunged to a new low past the 79-mark against the dollar on account of the increasing demand for the U.S. currency, both from oil refiners needing to settle their rising crude import bills, and foreign portfolio investors who continue to withdraw their capital from Indian equity and debt, analysts said.

The rupee depreciated 18 paise to close at 79.03 to a dollar.

“The rupee has continued to move on the downhill journey since the beginning of the year, amid a backdrop of heavy foreign fund outflows from the domestic markets, strength in the safe-haven dollar towards two-decade highs, and firming crude oil prices,” said Sugandha Sachdeva, Vice President - Commodity and Currency Research, Religare Broking Ltd.

The Indian currency has weakened by about 6.3% against the dollar since the beginning of 2022, she added.

“Even as the rupee holds a depreciation bias in the near term, we envisage that the rupee would manage to reverse some of the losses in the second half of the year,” Ms. Sachdeva said. “Strong long-term fundamentals, political stability, and a large pile of forex reserves are likely to provide a cushion to the Indian rupee around the crucial 80 mark,” she added.

“The Indian rupee has been adversely affected mainly by the FIIs pulling out funds from the equity market, rising crude prices, the deteriorating trade balance and dollar strengthening,” analysts at Emkay Wealth Management wrote in a note.

Foreign institutional investors have sold local shares and bonds worth $29.7 billion so far in 2022.


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Printable version | Aug 12, 2022 8:41:11 pm | https://www.thehindu.com/business/rupee-weakens-past-79-to-new-low-versus-dollar/article65582955.ece