The Indian rupee on Thursday hit a historic low against the US dollar amid firming overseas markets. The Indian rupee fell by 18 paise on Thursday. The Indian currency closed at 79.9975 against the dollar in the forex market while wholesale inflation remained in double digits for 15 consecutive months till June.
Analysts, however, said the sharp fall in crude oil prices in the past few days provided relief to the rupee. The Indian Rupee has become the average performer among regional currencies. In the interbank foreign exchange market, the rupee started the day with a strong trend at 79.71 per dollar. During trading, the rupee went up to a high of 79.71 and came down to a low of Rs 79.99. The rupee finally closed at 79.99 per dollar, down by 18 paise against the previous closing price.
Wholesale price-based inflation eased to a three-month low of 15.18 percent in June on a sharp fall in mineral prices, but food inflation is picking up. June is the 15th consecutive month when wholesale inflation remained in double digits. Last month, wholesale inflation touched a record high of 15.88 percent. In June 2021, the wholesale inflation rate was 12.07 percent.
Meanwhile, the Finance Ministry has said that India's current account deficit is likely to worsen in the current financial year due to costly imports and weak merchandise exports. To meet the financial needs of CAD and rising FPIs, foreign exchange reserves have declined by USD 34 billion in the six months from January 2022.
Analysts say US inflation is at a 41-year high. The demand for the dollar is increasing amid volatility in the global market due to the ongoing war between Russia and Ukraine. Various sanctions have been imposed on Russia due to war. Due to this, the demand for dollars for trading is increasing continuously, due to which the dollar has reached the strongest position in 20 years. Its direct effect is also visible on the rupee.
Importers will suffer losses, exporters will benefit
The depreciation of the rupee will hurt the importers, while the exporters will benefit. On importing any item, we have to pay more rupees in dollars. Traders will get more rupees in terms of dollars in exports.
pressure will continue
Dilip Parmar of HDFC Securities said that raising interest rates by central banks across the world and higher demand for dollars put pressure on the rupee in the April-June quarter. This decline may continue even further and the rupee may cross 79.10.
Analysts say that the RBI may need to change how the rupee depreciates, as its approach so far has only accelerated the depreciation of the rupee.
Also Read: WPI Inflation in India: WPI inflation continues to hit 15.18 percent in June
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