Rupee Hits Fresh Low; Breaches 80 Mark Against USD

In early Tuesday trading, the Indian rupee crossed the dreaded 80-mark and hit 80.05 against the US dollar. The rupee lost 15 paise from its previous close to end the day at 79.97 on Monday.

Overnight, the price of crude oil increased by more than 5% after Saudi Arabia refused to commit to supply increases in response to US president Joe Biden's visit and a setback along the Keystone pipeline that reduced shipments of some Canadian oil to US refiners, according to Bloomberg.

The local currency has put additional strain on the balance of payments due to a record-high trade deficit and ongoing withdrawals of foreign portfolio investors.

The central bank outlined a host of steps to bolster the capital account, focusing on loan inflows and foreign commercial borrowings, to address the widening current account deficit (CAD).Gaurang

Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, said, "Rupee consolidated in a narrow range in yesterday's session after retracing from higher level on Friday. The Dollar too fell against its major crosses as investors pared bets on how aggressive the Federal Reserve would be in raising rates at its meeting later this month. The greenback fell after data showed U.S. home builder sentiment plummeted in July to its lowest level since the early months of the coronavirus pandemic."

He added, "Pound rose ahead of the jobs and inflation number that will be released later this week. Britain's former finance minister Rishi Sunak held onto his lead in the race to become Britain's next prime minister on Monday as another hopeful was knocked out, leaving four candidates in an increasingly bitter contest to replace Boris Johnson. Today, focus will be on the final CPI number from the EU to gauge a view for the currency. We expect the USDINR(Spot) to trade with a positive bias and quote in the range of 79.40 and 80.20."