Rupee: The currency sunk past 81.50 per dollar on Monday as the dollar rose sharply to all-time high against most major currencies. This happens to be when there are already concerns that rising borrowing costs world-wide could trigger a global recession. This was the third straight session that record low levels were breached.
According to sources, the rupee last traded at 81.5038 to the dollar, down from its Friday closing price of 80.9900, when it opened at its lowest point of 81.5225 and hit a record low of 81.5587.
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Rupee in early trade dropped 38 paise to a record-low of 81.47 versus the US dollar.
Experts react to the situation
Jateen Trivedi, Vice President – Research Analyst at LKP Securities said that, “The panic is created by the dollar index which witnesses strong buying as a strong hedge against interest rate hikes and inflation cycle. The rupee downtrend will continue as long as positive triggers are not witnessed from the inflation forefront.”
Additionally, he said that “The next trigger for the rupee next week is the RBI policy which shall provide some respite to the rupee fall. The rupee range can be seen between 80.50-81.55 before RBI policy,” he added.
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The Reserve Bank of India is scheduled to hike rates later this week, but the precise amount has divided many policy observers.
India’s foreign exchange reserves have been progressively falling over the past few months as a result of the RBI’s market intervention to defend the depreciating rupee and for the country’s trade settlement. This depletion is one more factor for the rupee’s depreciation.
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