Rupee Continues To Falter; Hits All Time Low Today

Rupee in trade on Wednesday (June 29, 2022) has continued its downward slide, hitting a fresh all time low of 78.98 per US dollar. The domestic unit today opened at 78.85 versus its previous close of 78.78 per US dollar.

Rupee Continues To Falter; Hits All Time Low Today

The rupee for some time now has been pressured owing to the continuing foreign capital outflow, strong dollar, rising crude etc.

As per the stock market data, FIIs offloaded equities amounting to Rs. 1244.44 crore on Tuesday and came out as net sellers. So far this year, foreign investors have offloaded Indian equity worth $28 billion.

Notably, the safe haven dollar index is gaining favour as the global central banks are resorting to monetary tightening. Further, the inflationary pressure that is leading to worries over impending recession is also boosting its appeal. "The dollar climbed by 0.52% on Tuesday as policymakers promised further rapid interest rate hikes to bring down high inflation but pushed back against growing fears among investors and economists that sharply higher borrowing costs will trigger a steep downturn. However, sharp upside was capped on weak consumer confidence data. Consumer confidence Index dropped to 98.7 in June from 106.4 in May and weaker than estimate of 100.00", says ICICI Direct in its currency outlook report.

As of writing this copy, Brent crude is trading soft by a tad at $117.7 per bbl. Analysts are of the view that the domestic currency can weaken further if crude prices continue to gain.

"The rupee is expected to depreciate today amid rising crude oil prices and strong US dollar. However, investors will closely watch US GDP QoQ (Q1) data as it is expected to drop by 1.5%. US$INR is expected to surpass the hurdle of 78.06 to continue its upward trend towards the level of 78.20", adds the brokerage.