Rupee Under Pressure Ends at Rs 91.47 /$, Steepest One Day Fall in a Month
New Delhi: In its steepest one-day fall in a month, the rupee fell to its weakest in a month on March 2 (Monday). Reuters reports that “the cost of hedging against further depreciation against the dollar rose.”
It also reports that the Reserve Bank of India likely stepped into the market, as per what traders told the news agency. Moneycontrol reports that this has now put the spotlight on the Reserve Bank of India’s (RBI) forex reserves, “which have seen swings throughout the month.” It reports that the RBI is expected to try and “safeguard the psychological Rs 92 per dollar level.”
The sharpening military conflict in West Asia has kept financial markets globally in turmoil, and India’s Rupee woes have only got exacerbated. It fell 0.5% to end at 91.47 per dollar on Monday.
The focus, a trader at a large foreign bank told Reuters, was on "just managing risk and not taking any additional exposures,", considering as well that March 4 (Wednesday) is a holiday for Holi, that will keep financial markets in India shut.
The currency remains under pressure as investors move towards safe-haven assets. There is foreign capital outflow from equities, and fears grow that costly import will hurt the trade balance,” Dilip Parmar, senior research analyst, HDFC Securities told Business Standard.
The Hindu reasons that there will be more pressure on the rupee as “India faces the risk of a sharp increase in its import bill with the rising crude prices in the international market, as the country's 85% fuel requirement is met through imports.”
The rupee in the past few months had earned the monicker of being “Asia’s worst performing currency,” due to trade and tariff troubles since last year and large foreign investor outflows. It is more vulnerable after the war in West Asia has meant global turmoil.
The newspaper also pointed out yesterday that as per the latest RBI data released on February 27 (Friday), “India's forex reserve dropped by $2.119 billion to $723.608 billion during the week ended February 20. The overall reserves had jumped by $8.663 billion to an all-time high of $725.727 billion in the previous reporting week.”
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