Increasing tension in the Middle East and rising crude oil prices have spoiled the movement of the Indian rupee. On Wednesday, the Indian currency reached an all-time low against the dollar. Due to the strengthening of the dollar abroad and continuous outflow of foreign capital, the rupee fell by 18 paise to reach a record low of 92.58 against the US dollar. Meanwhile, American firm Goldman Sachs has estimated that the rupee may reach the level of 95 this year.
Forex traders said that amid the increasing conflict in West Asia, high prices of crude oil in the global market further weakened the market sentiment. At the Interbank Foreign Exchange, the local currency opened at 92.42 against the dollar and remained in the range of 92.46-92.47, after which it fell to 92.58.
On Tuesday, the domestic currency had reached its previous lowest intra-day level of 92.47 against the dollar, after which it closed at an all-time low of 92.40.
Anil Kumar Bhansali, treasury head and executive director, Finrex Treasury Advisors LLP, said the rupee hit a new low ahead of central banks meetings as the Reserve Bank of India allowed it to breach the 92.50 level, PTI reported.
growth forecast
Goldman Sachs last week cut its growth forecast for India this year to 6.5% from 7% and raised its inflation forecast by 30 basis points. It estimated that the current account deficit would increase by 0.8 percentage points to 1.2% of GDP this year, starting in 2025.
Shantanu Sengupta, chief economist at Goldman Sachs, said that the Indian government is using fiscal policy to save the economy from the energy crisis, so the RBI will not need to take any immediate action, but it will probably provide liquidity support to the economy. He further said that there is a risk of the supply of bonds increasing in the next financial year starting from April, which will depend on how long the conflict lasts and what the oil prices remain.
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