Rupee dips to 88.21 as H-1B visa hike impacts IT sector; equity markets slip

The rupee slipped to 88.21 against the US dollar amid US H-1B visa fee hikes impacting IT stocks. Domestic equities opened lower, while forex reserves rose, Brent crude climbed, and PM Modi highlighted GST reforms to boost India's growth.

Mumbai: The rupee witnessed range-bound trading in morning deals on Monday and depreciated 5 paise to 88.21 against the US dollar, as the strength of the American currency in the overseas market and a negative trend in domestic equities weighed on investor sentiments.

Forex traders said the recent hike in H-1B visa fees to USD 100,000 per year could trigger a sensitivity move in the IT sector, as companies may face margin pressure and reduced remittances due to the potential slowdown in employee deployments to the US.

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At the interbank foreign exchange market, the rupee opened at 88.20, then lost ground and touched 88.21 against the US dollar, registering a decline of 5 paise over its previous close.

On Friday, the rupee appreciated 4 paise to close at 88.16 against the US dollar.

On the H-1B visa fees hike, CR Forex Advisors MD Amit Pabari said, beyond the sectoral impact, India’s overall services exports could also take a hit if overseas deployments are curtailed, thereby affecting the country’s external balances.

“This policy shock is likely to weigh on investor sentiment, contribute to equity outflows from the Indian IT sector in the near term, and could also exert pressure on the Indian rupee,” Pabari added.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.13 per cent to 97.77.

Brent crude, the global oil benchmark, was trading 0.66 per cent higher at USD 67.12 per barrel in futures trade.

Prime Minister Narendra Modi asserted on Sunday that the GST reforms kicking in from Monday will accelerate India’s growth story, “Aatmanirbhar Bharat”, and provide a boost to ‘swadeshi’ products to the country’s prosperity.

On the domestic equity market front, the Sensex dropped 475.16 points to 82,151.07 in opening trade, while the Nifty declined 88.95 points to 25,238.10.

Foreign Institutional Investors bought equities worth Rs 390.74 crore on a net basis on Friday, according to exchange data.

India’s forex reserves jumped USD 4.698 billion to USD 702.966 billion for the week ended September 12, the Reserve Bank of India said on Friday.

In the previous reporting week, the overall reserves had increased USD 4.038 billion to USD 698.268 billion.

Meanwhile, Commerce and Industry Minister Piyush Goyal will lead an official delegation to the US for trade talks on September 22.

The delegation plans to hold talks with the US team to take forward discussions with a view to achieving an early conclusion of a mutually beneficial trade agreement.

The minister will visit New York and will be accompanied by the special secretary in the ministry, Rajesh Agrawal, and other officials.