Hyderabad: Indian rupee on Tuesday sunk to its lowest 80 to a US dollar as the Indian currency continued to be in the free fall. Later in the day, it recovered to close at 79.92 (provisional) against the US dollar. At the interbank forex market, the local unit opened lower at 80.00 against the US […]
Hyderabad: Indian rupee on Tuesday sunk to its lowest 80 to a US dollar as the Indian currency continued to be in the free fall. Later in the day, it recovered to close at 79.92 (provisional) against the US dollar.
At the interbank forex market, the local unit opened lower at 80.00 against the US dollar and fell further to an intra-day low of 80.05.
On Monday, the rupee for the first time declined to the low level of 80 against the US dollar before ending 16 paise lower at 79.98 amid a surge in crude oil prices and unrelenting foreign fund outflows.
Meanwhile, Minister of State For Finance Pankaj Chaudhary in a reply in the Rajya Sabha on queries related to exchange rate, reasons for extreme devaluation against the dollar, and measures taken to strengthen the rupee, attributed the rupee fall to the global factors such as the Russia-Ukraine conflict, soaring crude oil prices and tightening of global financial conditions.
The depreciation of the rupee was likely to enhance the export competitiveness, which in turn impact the economy positively. It also makes imports costly.
On a query if the government had noticed that the rupee value against the dollar was at the lowest in 70 years, he said the British Pound, Japanese Yen and the Euro have weakened more than the rupee against the dollar and therefore Indian rupee has strengthened against these currencies this year.
On the steps taken to strengthen the rupee, he said RBI has raised interest rates in the recent months and that increases the attractiveness of holding rupee for residents and non-residents.
The other measures taken by the RBI include exemption of incremental foreign currency non-resident (bank) (FCNR(B)) and non-resident (external) rupee deposits from the maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), exemption of these from the extant regulations on interest rates to allow banks to provide higher interest rates till October 31.
RBI also revised the regulatory regime relating to foreign portfolio investment in debt flows to encourage foreign investment in Indian debt instruments. The apex bank also raised the external commercial borrowing limit under the automatic route to $ 1.5 billion. It also allowed Authorised Dealer Category-I banks to use overseas foreign currency borrowing for lending in foreign currency to entities for a wide set of end-use purposes.
“The rupee hit its lowest Rs 80 against the dollar. In case the rupee was to appreciate, it can test the Rs 78.2 level in an optimistic scenario. On the flipside, the worst case scenario indicates a potential up to Rs 83.5 against a dollar. These are targets over the next two-three quarters,” said Vijay Bhambwani, Head of Research, Behavioural Technical Analysis at Equitymaster.
March 2014 60.1
March 2015 62.59
March 2016 66.33
March 2017 64.84
March 2018 65.04
March 2019 69.17
March 2020 75.39
March 2021 73.5
March 2022 75.81
June 2022 78.94
July 2022 80 (later recovered 6 paise to end at 79.92)
Source : RBI data