Rupee could slide to 82 as a strengthening dollar is nullifying RBI efforts

• Rupee has fallen 5.9% this year to 78.95 today from 74.51 on January 1, 2022.
• Continuous FII outflows, rising dollar index, rising interest rates and inflation are major concerns sliding the rupee lower.
• Analysts predict the rupee to hit as much as 82 in the coming time.

Rupee has been extremely volatile this year despite the Reserve Bank of India efforts to keep it from falling further. But rising crude oil prices, interest rate hikes across central banks and the continuous outflow of liquidity from the market has only dragged it down.

Yesterday on June 28, it touched a record low of 78.78 by falling 41 paise in a single session. Today, it fell to 79.02 and inched back up slightly to 78.92. This fall was triggered by rising crude prices oil prices in the last few days, after Russian bombings took away the hope that it would end soon.

Rupee fell 5.9% this year to 78.95 today from 74.51 on January 1, 2022 and further analysts expect it to fall more attributing the current economic conditions.

“The geopolitical tensions and soaring inflation has increased the economic uncertainty and growth fear. Although, RBI has started taking steps to curb the inflation and control the liquidity, the strengthening of the dollar has nullified the impact. The current momentum can pull rupee to 80 levels having support around 78 levels,” said Ravi Singh, vice president and head of research at Share India.

Continuous FII outflows, rising dollar index, rising interest rates and inflation are major concerns sliding the rupee lower.

Rupee could hit as much as 82 in coming time
FIIs sucked out ₹.2.22 lakh crore from the Indian markets including equity, debt and hybrid assets as compared to ₹50,000 crore inflows in 2021.

“Interest rates are continuously rising that's why emerging market investors are transferring money from equity to debt market,” said Amit khare, AVP- research commodities at Ganganagar Commodity.

“Rupee can hit 81.50 - 82 levels in the coming future, currently trading around 79.00,” said Khare.

In fact, some of RBI’s measures to sell dollars through spot market intervention has triggered it further.

“RBI’s efforts of managing volatility in rupee via forwards, non-deliverable forward NDF and spot market by selling dollars has prompted dollar/rupee premiums to tumble thereby adding more pressure on the currency. Not only this, dollar liquidity shortage, continuous outflows from the local system and plausible bullish US Dollar Index shall keep the rupee in jitters for some more time,” said Heena Naik, research analyst - currency at Angel One.


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