The Indian rupee fell 64 paise to close at an all-time low of 93.53 against the US dollar on Friday. Pressure on the rupee increased due to continuous withdrawal of foreign funds and sharp rise in crude oil prices, which is believed to be an effect of increasing geopolitical tension. According to Forex traders, the rise in crude oil prices and risk-aversion of investors have weakened the rupee. Additionally, energy costs are rising due to rising global uncertainty, which is likely to widen the trade deficit and create inflationary pressures.
64 paise less than previous closing level
In the interbank foreign exchange market, the rupee opened at 92.92 and crossed 93 for the first time. It continued to fall during trading and finally closed at 93.53, which is 64 paise less than its previous close. Earlier on Wednesday also, the rupee had fallen by 49 paise and closed at its previous record low of 92.89. Forex markets remained closed on Thursday due to Gudi Padwa. Dilip Parmar, Senior Research Analyst, HDFC Securities, said the rupee continued to depreciate due to the “double shock” of continued foreign investment outflows and rising crude oil prices. He told that technically USD/INR is in an uptrend and it can go up to the level of 93.75, while support is visible at 92.90.
Threat of global inflation
Meanwhile, the dollar index, which gauges the US dollar’s strength against six major currencies, was trading 0.37 per cent higher at 99.60. At the same time, the global benchmark Brent crude remained around $ 108.62 per barrel in futures trading. Forex traders say concerns about global energy supplies have increased in the third week of the ongoing conflict involving Iran. Due to the impact of the Strait of Hormuz, an important waterway between Iran and Oman, there has been a sharp rise in the prices of crude oil, due to which the risk of inflation has increased at the global level.
Some improvements in the Indian market
However, some improvement was seen in the domestic stock market. The BSE Sensex closed 325.72 points (0.44%) higher at 74,532.96, while the Nifty 50 rose 112.35 points (0.49%) to 23,114.50. According to exchange data, foreign institutional investors (FIIs) made a net sale of shares worth Rs 5,518.39 crore on Friday. Meanwhile, according to the Reserve Bank of India, India’s foreign exchange reserves declined by $7.052 billion to $709.759 billion in the week ended March 13. Even in the previous week, the reserves had decreased by $ 11.683 billion, whereas in the week ending February 27, it had reached a record high of $ 728.494 billion.