![]() ![]() RBI cannot allow any appreciation in the rupee as it would remove the competitive edge of the currency and has no alternative but to allow it to weaken over a gradual period of time. The dollar would remain firm in the next few months until Fed announces rate cuts as the economy falls into recession and its target of 2% inflation is achieved.ĬNH at 7.10, KRW at 1410 and IDR at 15025 are all in depreciation mode. The rupee had been an outlier as it had depreciated by only 7.5% till 21st September while till today the depreciation has gone up to 8.5%. The Asian currencies have also remained weak, and most have depreciated by 10-15%. The differential has been putting pressure on the rupee. The Fed continues to remain hawkish on the interest rate front and the interest rate differential between the dollar and rupee has been decreasing slowly from a high of 4.5% in 2022 to 2.9% currently. Oil has been in a comfortable zone for India as it remains below $100 on recession and China slowdown concerns.įoreign portfolio investors (FPIs) who were buyers of equities and sellers of the rupee during September could again turn into sellers which could put additional pressure on the rupee. The rupee looks weak with a trade deficit of $30 billion per month and a CAD of 3.5% to the GDP highest since 2013. The RBI which had been protecting the rupee, not letting it cross 80 levels, suddenly left it and the pair ran to its lowest level of 80.98 on 22nd September and made a new intra-day low on 23rd September 2022 of 81.25. The US dollar 2-year yield crossed 4.10% while the 10-year was at 3.50%, resulting in an inverted yield curve which indicated a full-blown recession in the US.Įurope is already reeling under a recession due to the Russia-Ukraine war, gas supply issues and nearly double-digit inflation.
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