The rupee has seen a decline for the second consecutive day and has reached a record low level.
On Tuesday, the rupee fell by 35 paise and closed at an all-time low of 95.63 (provisional) against the US dollar. The reason for this was the increase in tension between America and Iran. Due to which tension prevailed in the global markets. Forex traders said that the market environment was influenced by the fear that this 10-week conflict could further limit global supply. This fear increased further when President Donald Trump rejected Tehran’s latest reaction to the US-backed peace proposal, calling it completely unacceptable.
Additionally, market watchers saw Prime Minister Narendra Modi’s comments over the weekend on fuel conservation and reducing imports as a subtle admission that India’s trade deficit and balance of payments pressures could worsen if crude oil prices remain high for long. Let us also tell you what kind of figures are being seen in the currency market.
Rupee falls for the second consecutive day
At the interbank forex market, the rupee opened at 95.57 and fell further to touch an all-time intraday low of 95.74 against the American currency. The rupee finally closed at a record low of 95.63 (provisional) against the dollar, which was 35 paise lower than its previous close. On Monday, the rupee had fallen 79 paise to close at its record low of 95.28 against the US dollar.
Mirae Asset Sharekhan Research Analyst Anuj Chaudhary said that we expect the rupee to trade with a negative trend in the environment of uncertainty regarding peace talks between the US and Iran after the US rejected the response given to Iran’s peace proposal.
He said that the rise in crude oil prices and the strength of the dollar can pull the rupee further down. However, any intervention by RBI may support the rupee at lower levels. The spot price of rupee against the dollar is expected to trade in the range of 95.30 to 96.
Dollar and stock market situation
- Meanwhile, the dollar index, which measures the dollar’s strength against a basket of six currencies, was trading at 98.28, up 0.33 percent.
- Global oil benchmark Brent crude rose a massive 3.09 per cent to USD 107.43 per barrel in futures trade, raising fears of supply disruptions and rising energy costs.
- Talking about the domestic stock market, Sensex fell 1,456.04 points to close at 74,559.24, while Nifty fell 436.30 points to 23,379.55.
- According to exchange data, foreign institutional investors sold shares worth Rs 8,437.56 crore on Monday.
PM Modi’s appeal
IFA Global said in a research note that after PM Modi’s advice on Sunday to use fuel wisely and reduce the outflow of foreign currency, the markets became nervous as the realization of how serious the energy situation is. PM Modi on Sunday called for judicious use of fuel, purchase of gold and postponement of foreign travel, among other measures, to strengthen the economy.
Addressing a rally organized by Telangana BJP in Hyderabad, he suggested reducing petrol and diesel consumption, using metro rail services in cities, carpooling, using electric vehicles (EVs) more, using railway services for movement of parcels and working from home to save foreign exchange amid the crisis in West Asia. Emphasizing the need to save foreign exchange amid the crisis, Modi called for postponing gold purchases and foreign travel for a year.
Trump’s statement
US President Donald Trump said on Monday that the ceasefire with Iran is at its “weakest” and on “large life support”; He said this a day after rejecting as “completely unacceptable” Tehran’s proposal to end the months-long war. Responding to a question on the ceasefire with Iran after the peace proposal was rejected, Trump told reporters in the Oval Office, “It’s at its weakest … after reading the nonsense they sent us … it’s on life support, massively on life support. They think I’ll get tired of it, or I’ll get bored, or there’ll be some pressure on me, but there’s no pressure, no pressure at all. We’ll absolutely win.”
