With the Indian rupee plunging to historic lows against the dollar, analysts have predicted that the local currency is all set to touch the 80-rupee barrier against the US currency.
For the past four to five days, the Indian currency has been facing severe blowbacks as foreign institutional investors have continued to dump Indian equities in search of safe haven US dollars, putting further pressure on the local currency.
At the start of the year, the rupee-dollar exchange rate was at 74. But recession fears, the Russian invasion of Ukraine and the resultant spike in oil and gas prices have put tremendous pressure on the rupee.
According to Bloomberg data, the currency has slumped to a new record low level 26 times since Russia invaded Ukraine late in February.
On Thursday, the local currency opened trading at a lifetime low of 79.71 (provisional) per US dollar compared to its previous close of 79.63.
Analysts believe that the rupee-dollar exchange rate will most certainly touch 80 as the experts expect the United States Federal Reserve to hike the interest rates by another 75 to 100 basis points at the end of the month to tackle hot inflation. This will further trigger the outflow of dollars from India and back to the US.
“Rupee is expected to depreciate today (Thursday) amid strong dollar and risk aversion in global markets. Market sentiments are hurt as red hot inflation in the US stoked bets that the US Fed may have to raise interest rates much more than expected, even 100 bps. Additionally, consistent FII outflows and concerns on looming recession may hurt rupee. US$INR (July) is expected to trade in a range of 79.50-80.00,” said ICICI Direct in a statement.
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