The Indian rupee struck a new record low against the U.S. dollar on Tuesday, as the U.S. dollar rallied internationally in response to the decline in global equity markets.
Rupee Versus Dollar
The partly convertible rupee decreased to a record low of 79.66 versus the US dollar on the interbank foreign exchange market. The rupee’s closing value versus the dollar on Tuesday was 79.60 (provisional), up from 79.45 the day before.
On Tuesday, the major indices of the Indian equity markets declined by almost one percent due to severe selling pressure in the IT, infra, and banking sectors, as well as weakening in foreign markets.
Indian Markets
Due to increased imports, the country’s trade imbalance has expanded. The value of India’s goods imports for the period of April-June 2022-23 amounted to $187.02 billion, representing a 47.31 percent raise over the value of $126.96 billion during the same period in 2021-22.
Anuj Gupta, vice president of research at IIFL Securities, said, “There’s nothing wrong with the Indian economy, which is causing the rupee to depreciate versus the dollar.”
The aggressive stance taken by the Federal Reserve of the United States in the form of an interest rate rise has contributed to a strong dollar, which has won the favor of investors as a sanctuary.
According to the current triggers, the Indian Rupee may fall to levels between 80 and 80.50, and forex investors should consider any decline in the value of the US dollar to be a potential buying opportunity.
The United States dollar is the primary reserve currency used around the world. Therefore, if there is a possibility of a recession or a spike in volatility, the greenback is the currency that people rush to get their hands on because it is the safest option.
However, according to Reuters, traders anticipate the Reserve Bank of India (RBI) to sell dollars via state-run banks to stop the currency’s continued uncontrolled devaluation.
