The Rupee hit a record low when the Indian currency edges closer to 82 levels against the US dollar. The rupee fell to 81.90 versus the US dollar as US bond rates rose and the US currency strengthened. The rupee finished 14 paise higher at 81.53 against the US dollar on Tuesday after hitting a record low of 81.6525 on Monday.
In early trade, the domestic currency dropped 40 paise to an all-time low of 81.93 against the US dollar, according to PTI. Bloomberg shows that the rupee recently traded at 81.9050 per dollar after falling to 81.9350, its lowest level ever, from its previous finish of 81.5788.
The dollar index set a new record high due to the US Federal Reserve System’s tightening attitude. The euro and pound both fell against the US dollar, while the offshore yuan fell to its lowest level ever vs the dollar. The yen was still approaching the critical 145-point mark against the dollar, where Japan had interfered.
Why does the rupee’s fall matter?
Analysts believe establishing a floor for the rupee is challenging without stabilising the dollar index and Treasury yields. Today, the 10-year US Treasury yield surpassed 4% for the first time since 2010. The dollar index reached 114.68, a multi-year high. Domestic equities sank substantially today, owing to recent FII exits. The Sensex had fallen by almost 400 points.
In another rupee’s fall, Reuters reported that India’s bond participation in the JPMorgan emerging market index may be postponed until next year.
Jyoti Prakash Gadia, Managing Director, Resurgent India, said that the rupee’s fall against the US dollar would make imports more expensive. Inclusively, it will negatively impact domestic production and GDP in the short term. The most significant impact of the rupee’s fall would be inflation, given that India imports around 80% of its crude oil.