The Indian rupee seen some recovery after it slipped to a fresh record low of 73.81 per dollar on the back of rising global oil prices, and concerns over current account deficit and capital outflows.
Rupee recovered 18 paise from its all-time low of 73.81 per dollar, while it is trading lower by 29 paise at around 73.63 versus previous close 73.34 per dollar.
Yesterday the rupee ended at record closing low, down by 43 paise versus Monday’s closing 72.91 per dollar.
During the day, the rupee slipped to its all-time low of 73.42 per dollar as crude oil prices breached the USD 85 per barrel mark, leading to huge outflows of cash.
VK Sharma, Head Private Client Group & Capital Market Strategy at HDFC Securities said, "RBI refused to open a special window for oil marketing companies, lead to the sharp decline in rupee towards the new all-time low of 73.41 against the dollar. Other emerging currencies also weakened as dollar continue to strengthen."
"Oil prices has been sustaining on expectations of tighter supply once US sanctions start targeting Iran's petroleum industry from next month. India's central bank is widely expected to raise its policy repo rate at a review on Friday in a bid to slow the rupee's decline and rein in inflationary pressures, "he added.
Rupee fell to fresh record low levels after consolidating in a broad range of 73.20 and 73.70 levels for the last few sessions. On the domestic front, market participants will be keeping an eye on RBI policy statement and expectation is that the central bank could raise rates by 25bps, said Motilal Oswal.
Surge in global crude oil prices and weakness in the rupee could push the officials to raise rates, but importantly focus will be on whether central bank raises its inflation forecast for the latter half of the year. At the same time, market participants will also be looking forward to taking cues on how the central bank looks to tackle the liquidity issue.
In a view to support the rupee, yesterday, RBI permitted oil marketing companies to borrow as much as USD 10 billion through External Commercial Borrowings (ECBs) and waived off hedging requirements to relieve the pressure on the rupee. Today, USD-INR pair is expected to quote in the range of 73.60 and 74.20, it added.
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Source:https://www.moneycontrol.com/news/business/markets/indian-rupee-recovers-from-record-low-73-81-per-dollar-3011151.html
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