MUMBAI : The Indian rupee fell to its lowest level against the US dollar since September 2013 on global uncertainty following concerns of a likely default on payments by Greece, expected increase in interest rates by the US Federal Reserve and dollar demand by foreign investors that sold local equity and debt.
“The US Fed’s FOMC meeting on June 16,17 along with likely events at Greece could see some periods of transient volatility,’’ said Saugata Bhattacharya, chief economist at Axis Bank.
“Next few months the downside risk for the rupee is more. A potential cause for concern in case of a sharp volatility is for companies with un-hedged positions.’’
The rupee closed at 64.24 per dollar, the lowest since September 3, 2013. Analysts are also apprehensive of any sharp depreciation in the value of rupee and its impact on the price of imports and hence on accelerating domestic inflation.
“The level of 62-63 rupee per dollar is a good level for exporters,’’ said Ajay Sahai, a director general at Federation of Indian Export Organizations (FIEO).
“One reason for the rupee to fall is a 5 per cent drop in services exports over the last year and 20 per cent drop in export of merchandise in May.’’
Analysts are concerned at any sharper depreciation that could also prove to be a headache for RBI.
