Rupee slips to 80.14 / dollar

29 Aug 2022 , 10:42 AM

In response to Federal Reserve Chairman Jerome Powell’s steadfast commitment to combating excessive inflation even at the expense of economic development, the rupee sank to a new low versus the US dollar on Monday.

In the initial few minutes of trading on Monday, the rupee lost ground, falling as low as 80.14 to the US dollar as the US dollar index surged far over the 109 level. The rupee’s previous all-time low was 80.06 to the dollar on July 19. Due to market interventions by the Reserve Bank of India through dollar sales, the indigenous currency, which had ended Friday at 79.87 to the dollar, gained some ground, according to traders. At 9:30 am IST, the local currency was trading at 80.02 per dollar.

At the Jackson Hole Economic Symposium on Friday, Powell said that to restore price stability, “maintaining a restrictive policy posture for some time would probably be essential.” The historical data strongly discourages premature policy relaxation. The US dollar index, which compares the dollar to six of its biggest rivals, was last at 109.33, up from 108.20 at Friday’s end of the Indian market. The index has increased by more than 14% since the start of 2022.

The rupee and other emerging market currencies are under pressure, and a rising US dollar reduces interest from international investors in Indian assets. The rupee “has exceeded the previous lifetime low and is predicted to now reach 80.60 to 80.75 levels in the next one month,” according to Ritesh Bhansali, vice-president of Mecklai Financial Services. This decrease is consistent with that of other Asian currencies.

The rupee has lost little more than 7% of its value since 2022 began. Dealers said that the RBI had intervened in the market at around a dollar price of 80.05—80.10 and would prevent the exchange rate from moving excessively. “At this point, everything would rely on the RBI’s response to these record levels. 

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