Rupee This Week: Indian currency may continue to depreciate further – check reasons, expectations, and history

Rupee this week: The depreciation of the Indian rupee is likely to continue with the national currency breaching the 83-mark this week amid multiple negative factors, including a rise in the dollar index, analysts said in their expectations as they cite the reasons for the fall in the rupee.

The rupee pared most of its early losses and settled 4 paise lower at a fresh lifetime low of 82.34 (provisional) against the US dollar on Monday, weighed by risk-averse sentiment among investors.

Reasons for Rupee Depreciation

The Indian rupee has fallen to a record low amid risk-on sentiments in the market and as the US Fed’s tightening policy looks set to continue. Recent jobs data points to a robust US labor market giving the US Fed more room to raise interest rates aggressively, said Sugandha Sachdeva, Vice President, Commodity and Currency Research, Religare Broking.

This is boosting the US dollar and has suppressed the Indian rupee. In addition, increased demand from oil importers amid a recovery in crude oil prices following deep supply cuts is fueling concerns about a widening current account deficit, which is estimated to widen to around 3 % of GDP, he added.

Rupee expectations

“The rupee is likely to remain the depreciating mode this week as well amid a strong dollar and risk aversion in global markets. The dollar is gaining strength as improved US economic data points to an economic recovery” , said Pankaj Pandey Head – Research ICICI Securities.

The US INR traded with resistance and support wedges on the upside and broke the resistance wedges to initiate a new uptrend, Pandey said. “The pair is expected to continue trading in the uptrend towards the 83.00 level after breaking the key resistance level of 82.50 this week.”

History of the rupee

The local currency has fallen more than 9 percent against the U.S. dollar in the past year, while it has fallen nearly 3 percent in the past month and more than 1 percent in last week, according to national brokerage JM Financial. report on currency and derivatives.

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