Rupee Weakens To 79.80 On Sky High Dollar, Global Sell-Off Ahead Of US Jobs Data

Rupee Weakens To 79.80 On Sky High Dollar, Global Sell-Off Ahead Of US Jobs Data

Rupee Weakens To 79.80 On Sky High Dollar, Global Sell-Off

Rupee weakens as dollar near two-decade high

The rupee weakened sharply as the dollar rose broadly and on a global sell-off in risks assets ahead of key US jobs data, as investors brace for aggressive rate hikes from the Federal Reserve.

Forex traders said, while oil prices remained subdued, weak Asian and emerging market peers and higher inflation expectation weighed on the domestic currency.

PTI reported that the Indian currency fell 25 paise to close provisionally at 79.81 against the greenback.

“Taking cues from the regional currencies, the rupee depreciated against the American dollar. The risk-off moods and higher crude oil prices also weighed on the local unit,” Dilip Parmar, Research Analyst, HDFC Securities, told PTI.

Bloomberg quoted the rupee at 79.7875 per dollar from 79.5563 in the previous session, with the currency trading in 79.6062 to 79.8300 range.

Reuters said the partially convertible rupee ended at 79.7950, compared to the previous close of 79.5550. However, it closed up 0.1 per cent for the week, its first gain in three.

According to data, India’s preliminarily estimated trade deficit for July was $28.7 billion, a little decrease from the record $30 billion number in July.

“Trade deficit number will be a worry, but I don’t think the rupee reaction is due to that. It has largely to do with the surging dollar,” Ritesh Agarwal, head of treasury at CTBC Bank, told Reuters.

The dollar’s sustained strength will ensure the rupee breaches the 80 level, even though the Reserve Bank of India (RBI) has tried to protect it, he added, predicting that rupee could be at 80.5 by the end of September.

The domestic currency breached the key 80 per dollar level to hit a new record weak of 80.12 earlier this week, which it has since recovered from with the RBI’s support.

The dollar was headed for its third weekly gain in a row and was near two-decade highs against other major currencies.

Since Fed Chair Jerome Powell stated last Friday at the Jackson Hole symposium in Wyoming that rates would need to be high “for some time” to combat inflation, the US currency has been on the rise.

“We would have to see clearer signs of an economic downturn in the US with the addition of more cautious comments on the part of the Fed to end the USD rally,” You-Na Park-Heger, currency analyst at Commerzbank, said in a note.

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