Indian Rupee drops to record levels.

• The partially convertible rupee was trading at 79.10/11 per dollar.
• It fell below the 79-per-dollar level for the fourth straight session.
• Analysts predict the exchange rate to settle at 78/$ by March 2023.

Weakened by widespread rise in the dollar and as investors withdrew from local share markets, the Indian rupee fell on Friday, setting a new record low for the fourth straight session. It fell below the 79-per-dollar level.

Due to the likelihood of high U.S. interest rates and concerns over a generalised recession, the U.S. dollar has maintained its strength against most major peers.

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After reaching a record low of 79.1150 as of 08:20 GMT, the partially convertible rupee was trading at 79.10/11 per dollar. On Thursday, the unit reached its finish at 78.9675. According to researchers at rating agency CRISIL, “the rupee-dollar exchange rate would continue volatile with a depreciation bias in near term due to a widening trade deficit, outflows from foreign portfolio investments, and strengthening of the U.S. dollar index.”

The analysts said, “We predict the exchange rate to settle at 78/$ by March 2023, compared to 76.2/$ in March 2022.

Traders reported that although there was sporadic dollar selling participation in the market, the rupee was under a lot of depreciation pressure.

According to Rahul Bajoria, an economist from Barclays, “central bank currency assistance might continue given that imported inflation remains high and the rupee does not look significantly overvalued on a REER (real effective exchange rate) basis.”

He continued, “In our opinion, financing the ballooning current account deficit comes as the major cause of currency pressure.

The governor of the Reserve Bank of India, Shaktikanta Das, has stated numerous times that the country’s current account deficit is manageable and won’t present any difficulties this year. Analysts think that controlling India’s external imbalances will require a drop in commodity prices worldwide.

As persisting recessionary worries dampened investor sentiment, oil prices continued their downward trend from the previous day. This helped to halt the rupee’s further depreciation and placed benchmark indexes on course for their third consecutive weekly losses.

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