-
ALSO READ
Dollar hits 20-yr-high amid rising US rates, Ukraine war, China's lockdown
Inflationary fears: Rupee hits record low at over 77 against Dollar
Rupee advances to 75.91 against US dollar on low crude prices
Indian rupee surges 25 paise to close at 75.28 against US dollar
Rupee rebounds from all-time low; rises 19 paise to 77.31 against US dollar
-
India’s rupee may extend declines to a record-low 81 per dollar by year-end due to rising prices of crude and other raw materials, according to Bank of America.
The currency has already slumped more than 5% this year as Russia’s invasion of Ukraine sent Brent crude surging to almost $140 a barrel in March. The rally in energy prices has worsened India’s external finances as the nation relies on imports to meet about 80% of its oil requirements.
The rupee has also been pummeled by outflows of about $27 billion from Indian stocks this year, and by strength in the dollar driven by Federal Reserve interest-rate hikes.
The rupee “has continued to depreciate beyond our expectation of a gradual trend weakness,” Abhay Gupta, a strategist at BofA Securities in Mumbai, wrote in a note to clients. “The fundamental outlook has deteriorated further primarily due to higher oil and other commodities.”
Gupta’s new year-end prediction of 81 per dollar is more bearish than all 23 forecasts in a Bloomberg survey.
The rupee has set a series of new all-time lows against the dollar in recent weeks, with its latest being 78.2888 on Wednesday.
Still, the Reserve Bank of India’s reserve buffers and monetary policy tightening may help contain the prospect of an even larger depreciation, Gupta said.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU