Rupee at record low as US dollar surges globally domestic markets fall

The rupee fell to a new low versus the US dollar as it rose to a 20-year high worldwide and domestic equities lost value. In contrast to Monday's close of 79.44, the rupee was trading at 79.61 against the US dollar on Tuesday morning.

The US dollar index, which compares the greenback to six other major currencies, stood at 108.42 as opposed to 107.67 on Monday. According to Bloomberg data, the index was at levels last seen around August 2002.
The BSE Sensex and the NSE Nifty were trading 0.3% and 0.4% lower. Recently the dollar has been enjoying as investors have herded to the protection of the US currency due to concerns over slowing global economic growth, an energy crisis in Europe, and aggressive rate hikes by the Federal Reserve.

The US dollar index has increased by 13% in 2022. Over the same period, the rupee has lost 6.6% of its value against the US dollar. The broad dollar surge coincides with an unfavourable prediction for India's current account deficit due to record outflows of foreign investment and high crude oil prices.

Although the Reserve Bank of India (RBI) has announced several initiatives to lower the pressure on the rupee, currency analysts expect that the domestic economy will not improve anytime soon.

"In the recent past, RBI has taken steps that could ease the pressure on the rupee viz-a-viz country’s deficit. However, so far the positive impact of the same hasn’t yet been translated into the USDINR pair given by overpowering glooms and the risk-averse environment globally,” said Amit Pabari, managing director at CR Forex Advisors, in a note.

“The given fundamentals shall likely sustain its pressure on the rupee keeping the upside open well in place. As the pair breaks its crucial 79.50 levels, it’s a little far from the next big figure 80.00 levels that could be seen in the short run,” he said.