Indian Rupee drops past 80 per dollar
On July 19, 2022, the Indian rupee broke through the psychologically significant level of 80 against the US dollar for the first time. The local currency opened the day at 79.98 per US dollar, up from 79.97 the previous day. The price then dropped to a record low of 80.0175 in early trade. For some time now, the rupee has been under pressure due to a strengthening dollar, rising crude oil prices, a growing trade deficit, and a steady outflow of foreign portfolio investors. This year, it has fallen nearly 7% against the US dollar.
The Indian rupee has fallen by about 25% since December 31, 2014, according to finance minister Nirmala Sitharaman in the Lok Sabha on July 18. The main reasons for the rupee’s fall, according to the finance minister, are global factors such as the Russia-Ukraine conflict, soaring crude oil prices, and tightening global financial conditions.
So far in 2022-23, foreign portfolio investors have withdrawn approximately $14 billion from Indian equity markets, according to Sitharaman. The outflow of foreign portfolio capital is a major reason for the Indian rupee’s depreciation, she added.
In June, India’s merchandise trade deficit reached a new high of $26.18 billion. In May, the trade deficit was $24.3 billion. The record-high trade deficit also put pressure on the domestic currency.
“The pullback above 79.95 has cancelled the bear move, leaving the overall trend neutral and awaiting a directional push.” “The 79.95 region will remain important, with the USD-INR expected to trade today in a narrow band between 79.85 and 80.15,” said Anand James, chief market strategist at Geojit Financial Services.
