The rupee depreciated 38 paise to an all-time low of 82.68 against the US dollar in early trade on Monday (October 10). The Indian currency has been under pressure due to surging crude oil prices, apprehensions of more rate hikes by the US Fed and a widening trade deficit.
Experts say the downward trend is likely to continue in the near term. The rupee has fallen close to 9 per cent against the US dollar in the current fiscal.
India's rising merchandise imports and slowing exports have resulted in a trade deficit widening to USD 149.47 billion in the first six months of the current fiscal, putting further pressure on the rupee.
The strong dollar index combined with high oil prices and weakness/anticipated weakness of demand in Europe and US continues to put pressure on the rupee, Ranen Banerjee, Partner - Economic Advisory Services at PwC India, said. He also said the relative greater weakening of other emerging market currencies make Indian exports less competitive and that adds to the headwinds to the country's exports.
"We are in the midst of several moving pieces and the next psychological barrier of INR (Indian Rupee) 85 to a dollar could be tested in the short term if oil prices continue to be high, Fed gives another anticipated 75bps hike and the Ukraine conflict worsens," Banerjee said.
(With inputs from PTI)
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