Indian rupee touches a fresh low of 73.34 against US dollar

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For the first time ever, the Indian rupee has weakened past the 73 mark and fell to a fresh low on Wednesday. Today, the Indian currency reached an all-time low of 73.34 per US dollar compared to Monday’s closing value of 72.91. The opening price of rupee today morning was 73.25, and it worsened further to touch 73.34.

Indian rupee
Rupee touched its all-time low of 73.34 against the US dollar

Most experts attributed this fall to the rise in international crude oil prices. The price of Brent Crude has almost touched a four-year high of $85 per barrel. Analysts also expect that the rise in crude oil prices will lead to fiscal slippage and higher inflation. Traders in the country fear that these factors could lead to the Reserve Bank of India (RBI) increasing the interest rate in its upcoming monetary policy review.

The tightening of the international oil market has been attributed to various factors like US sanctions on oil import from Iran, lower oil production in Venezuela, and slower growth in the US oil output. As the crude price remains high, there are concerns in the industry regarding higher risks of fiscal slippage and inflationary pressures in the country.

Another reason attributed to the weakening of Indian rupee is the redemption pressure witnessed from foreign portfolio investors. Many foreign institutional investors (FIIs) have shown a keen interest in selling their Indian bonds and stocks. This has raised concerns over the inflow of foreign capital from these investors. So far this year, it is estimated that foreign investors have sold over $2.01 billion worth of Indian equity shares and $7.11 billion worth of debt instruments.

This year, the Indian rupee has declined by about 12.07% owing to various factors. In the Asian currency market, Indonesian rupiah declined 0.27% and Japanese yen declined 0.13% yesterday. On the other hand, the Chinese yuan and South Korean won increased by 0.31% and 0.07%, respectively.

Source: Livemint

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