For first time, rupee breaches 80-mark against dollar
New Delhi, July 20
The rupee fell on Wednesday to 13 paise to close below the 80 mark for the first time against the US currency due to a strong demand for the greenback amid high crude oil prices. At the interbank foreign exchange market, the rupee opened at 79.91 and settled at the day’s low level of 80.05 on close.
On Monday and Tuesday, the rupee had dipped below 80 during mid-session but had recovered against the US dollar due to forex inflows and possible RBI intervention. Forex traders said significant dollar demand from oil importers, firm crude oil prices as well as concerns about swelling trade deficit weighed on investor sentiments. Foreign institutional investors were the net buyers, purchasing shares worth Rs 976.40 crore.
India’s forex reserves stood at $ 580.252 billion last Friday, a drawdown of $ 27.05 billion since March-end.
“Yen and the pound have depreciated much more against the dollar. The RBI has announced liberalised rules to attract inflows. We have also raised the import duty on gold. Whenever the Federal Reserve is on an aggressive tightening, this type of reaction happens. This time it is far more moderate,” said Chief Economic Adviser V. Anantha Nageswaran.
“Rupee has crossed Rs 80. Modi Ji is the one who made it an election issue in 2014…He was going to strengthen the rupee when he came because it shows a weak govt… but then what is the strong govt giving us? Even a weaker rupee,” said Congress MP Shashi Tharoor.
Union Finance Minister Nirmala Sitharaman had said on Monday that the rupee was depreciating against the dollar largely due to global factors such as the Ukraine crisis, high crude prices and fiscal tightening. The latter reason has led to foreign portfolio investors (FPIs) withdrawing $14 billion from the equity markets and investing the amount in advanced economies where interest rates have been going up.
The Minister also made the point that currencies such as the pound, the yen and the Euro have weakened more than the Indian rupee against dollars. Therefore, the rupee has strengthened against these currencies in 2022, she maintained.
