NEW DELHI: The slide in rupee continues as Indian currency shed 54 paise against US dollar on Wednesday to end at a five-month low of 74.98, just shy of the 75 level.
Rupee touched an intra-day low of 74.99 after it opened the day at 74.63. It reached a peak of 74.54 during the day. In the last one month the rupee has depreciated by 2.3% against the US dollar.
The 54 paise slump in rupee on Wednesday came as a surprise to experts who felt that Moody’s revising the India outlook to stable should have strengthened the currency.
The recent fall in rupee is attributed to a combination of reasons including rising oil prices, weakness in equity markets, rising bond yields and the anticipation that central banks across the world would start rolling back the easy monetary policies leading to liquidity glut.
“Rupee fell sharply primarily on the back of weakness in domestic and global equities and also as the dollar rose to fresh one-year level. Market participants remain cautious also ahead of the important RBI policy statement that is scheduled to be released this Friday,” says Gaurang Somaiyaa, Forex and Bullion Analyst, Motilal Oswal Financial Services.
He says that any concerns over higher inflation in the RBI policy meeting could also weigh on the rupee.
Crude oil prices globally have rallied steadily in the past few weeks, and that is adding to worries for India’s elevated oil import bill. In the last one month, Brent Crude prices have jumped 12% from $72.54 a barrel to Rs 81.10 on Wednesday.
It touched a high of $82.81 on Wednesday. India’s oil import bill almost trebled to $25 billion in the first quarter of the current financial year against $8.5 billion in the previous year even though in volume terms the oil import grew by only 15%.
Meanwhile, currency experts expect the rupee to trade in the 74.8-75.2 range in the short term.
