The rupee has seen a decline of 54 paise against the dollar on Monday.Image Credit source: Google Gemini
The health of the Indian rupee is continuously deteriorating. The biggest reason for which is the prices of crude oil. However, the strength of the dollar has also left no stone unturned in damaging the rupee. Apart from this, record selling by foreign investors and geopolitical tension have also tried to worsen the deteriorating health of the rupee. At present it has crossed the level of 96 against the dollar.
If we talk about Monday, a fall of more than 50 paise was seen in the rupee. The special thing is that ever since the war started, there has been a decline of about 6 percent in the rupee. Last week also the rupee had to suffer a loss of 230 paise. Let us also tell you what kind of decline has been seen in the rupee against the dollar.
Rupee lost more than 50 paise
The Indian rupee weakened further on Monday and closed at a record low of 96.35 (provisional) against the US dollar. This happened under the pressure of rising crude oil prices due to ongoing geopolitical tensions and a strong dollar. Forex traders said that due to increasing tension between America and Iran, the global market environment is continuously cooling down. Additionally, traders said emerging economies, including India, remain under pressure from rising crude prices as higher rates increase outflows of US dollars. Also, there is already outflow due to FPIs.
At the interbank foreign exchange market, the rupee opened at 96.19, then fell further to 96.39 against the US dollar, registering a decline of 58 paise from its previous close. At the end of Monday’s trading session, the rupee was at 96.35 (provisional), which is 54 paise lower than its previous closing price. On Friday, the Indian rupee had fallen below the 96/USD level, after which it closed at an all-time low of 95.81 against the US dollar.
dollar to crude oil
- The dollar index, which measures the dollar’s strength against a basket of six currencies, was trading at 99.14. It declined by 0.14 percent due to increasing tension in Iran.
- In the international market, Brent crude, the crude oil of Gulf countries, was trading at 109.97 USD per barrel with a gain of 0.65 percent in futures trade.
- According to exchange data, foreign institutional investors remained net buyers for the second consecutive session. He bought equity shares worth Rs 1,329.17 crore on Friday.
- The Reserve Bank of India said on Friday that India’s foreign exchange reserves increased by USD 6.295 billion to USD 696.988 billion during the week ending May 8. Total reserves had declined by USD 7.794 billion to USD 690.693 billion in the last reporting week.
- Meanwhile, within days of imposing heavy custom duty on the precious metal, the government on Saturday also banned the import of silver. Under this, silver has been kept under the ‘license-based system’ for imported consignments.
- On May 13, the government had increased the import duty on precious metals – gold and silver – from 6 percent to 15 percent. The effective duty (including 3 per cent IGST) is more than 18 per cent. This step was taken to prevent foreign currency from going out by banning non-essential imports.
What do experts say?
Anuj Chaudhary, Research Analyst, Commodities Research at Mirae Asset Sharekhan, said that we expect the rupee to trade with a negative bias amid a strong dollar and rising US treasury yields. Ongoing geopolitical tensions and FII outflows may also put pressure on the rupee. However, any intervention by RBI and some restrictions on gold and silver imports may support the rupee at lower levels. The rupee is expected to trade in the range of 96 to 96.60 against the dollar.
