Rupee Closes At Record-low of 79.38 Against US Dollar

| Updated: July 5, 2022 6:13 pm

The value of the Indian rupee decreased further in relation to the US dollar, falling to 79.38 on July 5 as worries about a growing current account deficit gained traction.

According to official figures released on July 4, the nation’s merchandise trade imbalance increased to $25.6 billion in June 2022, up 62 percent from June 2021.

According to experts at Nomura, record-high trade deficits will become the norm and the rupee is anticipated to drop to 82 versus the dollar in the third quarter of 2022.

This May, the trade deficit reached a new high of $24.3 billion. Seasonally adjusted, the trade deficit increased to $29.9 billion from $25.8 billion in May.

In a recent note, Goldman Sachs stated that due to changes in the brokerage’s balance of payments forecast, they have revised their USD/INR forecasts for the next three, six, and twelve months to 80, 81, and 81, respectively.

Foreign portfolio outflows from equities reached $6.6 billion in June, the highest level since March 2020, bringing total outflows in 2022 to more than $30 billion.

Traders said the central bank sold dollars sporadically, preventing the rupee from falling further, but expectations of aggressive rate hikes by the US Federal Reserve and the resulting wider interest rate differential are expected to keep the rupee weak.

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