Rupee in trade today has hit a fresh three-month low and has breached the levels of 65 against the dollar currency and this has been eminent due to a host of factors discussed hereforth:
1. Dollar gained momentum after being in a rangebound range
It then impacted the domestic currency i.e Indian rupee to slid below the levels of 65 against the earlier close of 64.76 on Wednesday. The scene has been uplifted in sentiment as the US interest rates are expected to be hiked in not so distant future.
2. Weak clues from the Indian stock markets also made the currency to react in the opposite direction:
Buoyed by a host of factors that are causing a tumult in the stock markets such as the long anticipated correction as well as a big-size fraud at the PSB Bank which is seeing outflows from the market has also worked against the domestic Indian currency. Foreign investors have sold off a huge $ 1billion from the stock markets in the ongoing month.
3. Heavy demand of the dollar currency from importers:
The sentiment in the rupee currency got hit as there was scene a huge demand for the greenback by importers.
4. Higher yields have also supported the dollar currency and thus weakened rupee:
In the anticipation that the US govt this year will falter on its borrowings has issued additional debt which has moved the yields higher is another factor triggering the fall of rupee.
Persistent inflation concerns have also put a pressure on rupee
Inflationary risk is not seen to be subsiding anytime soon and as the matter of study is only expected to rise due to a number of economic and other factors.