The Indian rupee (INR) depreciated by 6 paise to 82.24 against the US dollar (USD) in early trade on Monday, May 15th, as it shrivels under the pressure of strapping American currency in the global market.
At the interbank foreign exchange, the INR opened weak at 82.22 against the USD, falling further to 82.24, registering a 6-paise fall over its last close.
Forex traders confirmed the INR was trading in a narrow owing to the negation of the strength of the American currency by a robust trade in domestic equities and moderation of crude oil prices.
This positive trend in domestic equities and ceaseless inflow of foreign funds controlled the downslide, traders stated. The support from safe havens made the USD stand at its highest level in a month against its major peers. Other Asian currencies also witnessed an unabated drop.
The USD was cushioned by the move up in the US yields. The two-year US yield returned to near about 4% following data that slightly heightened the chances of a price hike by the Federal Reserve in June.
Possibly the INR may not see a larger fall from its present levels, as some traders have contemplated. There is an expectation that India’s central bank, the Reserve Bank of India, will step in and sell USD if it breaches the 82.40-82.50 mark.
Moreover, so far in 2023, the INR has risen year-to-date by about 1% against the USD.
Analysts believe that the domestic currency may remain stable, even resilient, in the medium term owing to the crude oil price fall, easing of the dollar index in the middle of hopes of a pause in rate hikes, narrowing of India’s current account deficit and foreign investment inflows.
