The rupee hit its lowest price in history on Monday, closing at ₹96.35 per US dollar. The Indian currency depreciated by 54 paise in a single day, pressured by the appreciation of the dollar, rising crude oil prices and geopolitical tensions between the Estados Unidos and Irã. Operadores of the Forex market points out that global uncertainty continues to affect investor sentiment in emerging economies.
The market started the session at ₹96.19 and deteriorated further throughout the session. Pela for the first time in its history, the rupee broke the psychological mark of ₹96 per dollar, extending losses accumulated in recent months. Especialistas point out that the currency faces simultaneous pressure from multiple macroeconomic factors.
Movimento of the dollar and external pressures
The dollar index, which measures the strength of the American currency against a basket of six major currencies, rose 0.14% to 99.14. Petróleo Brent, an international reference, advanced 0.65% and reached US$ 109.97 a barrel. Ambos movements contribute to weakening currencies of economies dependent on energy imports, such as Índia.
Anuj Chaudhary, research analyst at Mirae Asset Sharekhan, says the rupee may remain at fragile levels. Ele projects the spot price to remain between ₹96 and ₹96.60 in the coming days, with the risk of further declines if the dollar remains strong or US Tesouro bond yields remain high.
Saída of Investors and Restrictions on Metals
Investidores Foreign Institutions (IIE) Maintain Pressure on Indian Assets. Retiradas of capital and reduction of allocations in emerging markets amplify currency devaluation. Restrições to imports of gold and silver, implemented by the Indian government to control external deficit, were not enough to stop the fall.
Investidores foreign institutionals remained net buyers for the second consecutive session, acquiring shares worth ₹1,329.17 crore last Friday. Entretanto, this move was not enough to offset broader currency pressures and outflows from other sources.
Reservas forex recovery
Segundo o Banco Central o Índia, the country’s foreign exchange reserves increased by US$6.29 billion in the week ending May 8, reaching US$696.98 billion. In the previous week, they had fallen by US$7.79 billion to US$690.69 billion. The recent recovery offers some cushion against exchange rate pressures, but has not prevented the breaking of new minimum levels.
Fatores putting pressure on the rupee:
- US Dollar Continuous Valorização
- Altos international crude oil prices
- Tensões geopolitics between Estados Unidos and Irã
- Global Incertezas Affecting Emerging Economies
- Retiradas selective foreign institutional investment
Perspectiva of Banco Central and near horizon
Analistas mention that possible intervention by Banco Central of Índia in exchange operations could support the currency at lower levels. The bank has been using its foreign exchange reserves to avoid excessive depreciations, although the strategy has its limits in the face of structural pressures.
The rupee had closed at ₹95.81 per dollar on the previous Friday, also marking a historic low at that time. The sequence of falls in two consecutive sessions reinforces the currency’s pattern of continued weakness. Operadores of the Forex market indicates that the ₹96.35 level is unlikely to be lasting support, with risks of further decline if new adverse factors emerge on the international scene.
