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Quote on Rupee 11 July 2022 By Ms. Sugandha Sachdeva, VP- Commodity & Currency Research, Religare Broking Ltd

The Indian rupee has pummelled to a fresh record low of 79.49 mark in line with the broad strength seen in the mighty dollar. With the US economy adding jobs at an impressive pace in June, the odds of a series of aggressive rate hikes have increased further, which is pushing the dollar index on an upwards trajectory. The greenback has surged towards a new 20-year high as the concerns about higher terminal rates in the US and deteriorating growth prospects are leading to safe-haven flows in the dollar, which is likely to weigh on the domestic currency in the near term. On the domestic front, concerns about a ballooning trade deficit which has surged to a record high of $25.6bln in June are adding further pressure on the local unit. Besides, India’s forex reserves have declined by $5bln to $588.31bln during the week ended July 1, highlighting the fact that RBI has been proactively intervening in the forex markets to curtail excessive volatility in the rupee-dollar exchange rate. Considering the dynamics, once the Indian rupee breaches the crucial 79.50 mark, we envisage it to weaken towards the 80 to a dollar mark in the coming days.

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