SoulMete - Informative Stories from Heart. Read the informative collection of real stories about Lifestyle, Business, Technology, Fashion, and Health.

India Rupee Falls to Record as Dollar Strength Dents Risk Mood

(Bloomberg) — The Indian rupee fell to a record low as dollar strength dented demand for riskier assets and foreigners continued to dump the nation’s stocks.

Most Read from Bloomberg

The rupee dropped as much as 0.7% to 77.4337 a dollar on Monday, slipping past the previous all-time low of 76.9812 touched in March. Stocks extended declines, with the benchmark S&P BSE Sensex Index retreating 1.5%.

“It’s clearly about dollar strength, as well as a function of oil,” Ashhish Vaidya, head of treasury and markets at DBS Bank Ltd. in Mumbai, said on Bloomberg TV. “As far as oil is buoyant, the rupee will continue to be under pressure.”

The moves may exacerbate worries about outflows after foreign funds pulled a record $17.7 billion from Indian equities this year with surging inflation and the prospect of aggressive monetary tightening roiling global markets. A surprise rate hike by India’s central bank hasn’t been able to stem the rupee’s decline as a widening current-account deficit amplifies concerns.

India relies on imports to meet about 80% of its oil needs and elevated energy prices threaten to quicken inflation and widen its current-account and trade deficits.

The Reserve Bank of India’s “recognition of the need for urgency in normalizing policy” has provided some support, BNP Paribas strategists Siddharth Mathur and Chidu Narayanan wrote in a note. “However, as equity flows can dominate interest-rate sensitive flows, there is a high downside risk to the rupee from a deterioration in equity market sentiment as a result of a rapid tightening in domestic financial conditions.”

The RBI has been using its forex reserves to stem the currency’s losses. Latest data showed that the reserve pile had dropped below $600 billion for the first time in a year.

(Updates with comment from analyst in third paragraph.)

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.


Source link
Leave A Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

buy levitra buy levitra online