Rupee Under Pressure: What’s Driving The Sharp Slide Past 91 Against The Dollar
The rupee fell from 90 a dollar to 91 in the last 10 trading sessions. The local unit has slipped 1 per cent against the greenback in the past five sessions alone.
- Rupee fell to 91 against US dollar, hitting record low.
- Sustained FII outflows and trade deal uncertainty impacted rupee.
- Forex traders predict further decline, possibly to 92.
The rupee plunged 36 paise to breach the 91-mark against the US dollar for the first time in intra-day trade on Tuesday, weighed down by sustained FII outflows and a lack of clarity on the India-US trade deal.
The rupee fell from 90 a dollar to 91 in the last 10 trading sessions. The local unit has slipped 1 per cent against the greenback in the past five sessions alone.
According to forex traders, rupee might even cross the 92 per dollar-mark this month.
At 11.45 am, the local unit was trading at 91.14 against the US dollar, down 36 paise from its previous close.
At the interbank foreign exchange, the rupee opened at 90.87 against the greenback and kept losing ground as the session progressed.
The rupee on Monday settled at a new all-time low of 90.78 against the US dollar, registering a loss of 29 paise over its previous close.
"With the India-US trade deal not happening soon because (US President) Donald Trump does not appear keen for an agreement without agriculture and India strictly saying no to it, the rupee crossed 91 and may even touch 92 this month," Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
"The buy-sell swap, rupee shortage due to tax outflow, speculators oil buying, trade deal not-happening, exporters holding dollars, FII... outflows, and debt selling are the reasons for fall in rupee," he said, adding that even a reduction in trade deficit on Monday could not bring about a recovery in the local unit.
FIIs sold equities worth Rs 1,468.32 crore on Monday, according to exchange data.
Also, wholesale price inflation stayed in the negative for the second consecutive month in November at (-) 0.32 per cent, even though there was an uptick in prices of food articles like pulses and vegetables on a month-on-month basis, government data showed on Monday.
Wholesale Price Index (WPI)-based inflation was at (-) 1.21 per cent in October and 2.16 per cent in November last year.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.03 per cent lower at 98.27.
Brent crude, the global oil benchmark, was trading 0.61 per cent lower at USD 60.19 per barrel in futures trade.
On the domestic equity market front, the 30-share benchmark index, Sensex, declined 363.92 points to 84,849.44 in early trade while the Nifty was down 106.65 points to 25,920.65.
(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)
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