The rise in oil prices and general US dollar strength today caused the Indian rupee to drop to an all-time record low of 80.01 against the US dollar. On Monday, the rupee had reached a high of 79.97. The dollar index, which compares the value of the dollar to six other currencies, increased somewhat to 107.33 on Tuesday after falling to one-week lows on Monday.
“The dollar index reached 109.2 last week, which is the highest level since September 2022”. In relation to the Indian rupee, the US dollar has increased by 7.5% so far in 2018.
According to the Finance Minister Nirmala Sitharaman, “the Indian rupee has fallen by nearly 25% since December 31, 2014. The main causes of the rupee’s decline, according to the finance minister, are global concerns including the crisis between Russia and Ukraine, rising crude oil prices, and tightening financial conditions worldwide”.
“Pull back over 79.95 has neutralised the bear move and left the general trend in wait for a directional push. “The narrow band in which the USD-INR is anticipated to trade today, between 79.85 and 80.15, will continue to be important around the 79.95 zone”, according to Anand James, the Chief Market Analyst at Geojit Financial Services.
“The European Central Bank is anticipated to increase interest rates for the first time in eleven years at its regularly scheduled policy meeting on Thursday. The euro was aided by potential ECB interest rate increases and the dollar index fell as a result”.
As per Rahul Kalantri, VP Commodities at Mehta Equities Ltd., “We anticipate the dollar index to remain unstable this week before the ECB policy meeting and could encounter significant resistance around 109.00 levels.”
He further added, the rupee, on the other hand, was unable to hold onto its gains and fell once more. The rupee fell once further despite the dollar index experiencing profit-taking. The rupee’s advances were constrained by another increase in crude oil prices. However, the rupee was supported at lower levels by a revival in the local equity markets. “We anticipate that the rupee will continue to fluctuate this week and that it may hold its crucial resistance level of 80.55 on a closing basis“.
Asheesh Chanda, founder and CEO of Kristal.AI, a global wealth advising platform, commented on the strong dollar in general by saying: “It is a clear message that global investors are selecting the safety of US markets over the Economic risks of the EU. The EU recession appears to be approaching given the looming prospect of Russia shutting off gas supply throughout the winter and the ECB’s gradual action to stabilise inflation”.
As a result, investors are purchasing dollars and selling euros. Additionally, it highlights how crucial the USD is as the safest currency in difficult times.
image credit : getty images
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