Rupee Depreciates Past 79 Per US Dollars, Analysts Predict More Pain

The rupee on Wednesday down off over 19 paise to close at an all-time low of 79.04 in comparison to the US dollar. It had opened at 78.86 against the greenback.
Rupee Depreciates Past 79 Per US Dollars, Analysts Predict More Pain
Rupee Fell Down Past 79 Per US Dollars

The rupee on Wednesday down off over 19 paise to close at an all-time low of 79.04 in comparison to the US dollar. It had opened at 78.86 against the greenback.

"The Dollar index was able to reverse nearly all of last week's decline in only one session as equities markets realized that recessions are bad for stocks after all. This morning, the dollar-yen exchange rate was back above 136, and the Indian rupee suffered a crushing decline to a new record low "said Jeffrey Halley, senior market analyst for OANDA's Asia Pacific region.

"Notably, US yields barely moved overnight so yen and rupee have no excuse on that front. It seems that markets are far more comfortable rushing into the apparent safety of the dollar at the first sign of trouble," Halley said.

Dollar index fell 0.10 percent to 104.40

The dollar index, which compares the value of the dollar to a basket of six important international currencies, fell 0.10 percent to 104.40.

The US Conference Board reported today that data released overnight revealed a dramatic decrease in US consumer confidence in June after a decline in May as a result of worries over high inflation leading US consumers to anticipate poorer economic growth in the second half of the year.

According to Sugandha Sachdeva of Religare Broking, the market is gauging whether the US Fed would hike rates rapidly in reaction to runaway inflation, while the prospects of a hard landing are increasing. "The emphasis will now shift to the EU annual summit and the OPEC+ meeting, which will give additional indications for the Indian rupee. A definitive break below the 78.50 level will open the door for additional depreciation below the 79.20 level in the coming days "She stated.

Rupee might fall to 80/81 by the end of the year

According to Jigar Trivedi of Anand Rathi Shares, the rupee might fall to 80/81 by the end of the year as twin deficits put pressure on the emerging market currency. The Fed is projected to raise rates by 75 basis points at its July meeting, but the RBI meeting is not scheduled until August, which might reduce yield differentials between India and the US and impact the rupee, he said.

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