Finance
The Indian rupee fell to a fresh low on Monday as the US visa fee hike and trade policy uncertainties dampened mood.
On Tuesday, the native currency fell 44 paise to 88.75 against the dollar, according to Bloomberg. During the day, the rupee fell to an all-time low of 88.79, bringing the total depreciation this year to 3.54 percent. In the last year, the currency has declined by 5.86 percent.
The increase in H-1B visa costs raised concerns about remittances and future stock outflows from India’s information technology (IT) sector, according to Kunal Sodhani, head of treasury at Shinhan Bank. Outflows from foreign portfolio investors (FPIs) and uncertainty about India-US tariffs continue to weigh on the rupee, he noted.
FPIs sold stocks worth ₹2,910.09 crore on Monday, totaling ₹1.37 trillion this year, according to NSDL statistics.
Oil demand was seen as well today, and the weakness remained in sync with its other Asian currencies, Sodhani said. “For the dollar-rupee pain, 88.10 remains a good base which seems to have shifted from 87.70 levels, while 89.00 levels are on cards.”
Over the weekend, Donald Trump signed an executive order boosting the H-1B application fee to $100,000 from the previous $2,000-5,000. The White House reiterated that it will be a one-time payment, effective September 21, which might put pressure on Indian outsourcers’ margins.
The Reserve Bank of India (RBI) has largely refrained from direct intervention in the currency market, allowing for increased volatility and the possibility of further rupee depreciation as it hits new lows against major currencies, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.
Meanwhile, during the session, the HSBC Flash India Composite Output Index, which evaluates the combined performance of India’s manufacturing and service sectors, decreased to 61.9 in September from 63.2 in August, indicating a minor slowdown but continued rapid growth.
The dollar index ended a three-day gaining streak, with traders eyeing US inflation data later this week. The dollar index against a basket of six major currencies fell 0.05 percent to 97.29.
Despite increasing geopolitical concerns, crude oil was trading higher as global markets focused on oversupply risks and easing demand. Brent crude prices rose 0.41 percent to 66.84 per barrel, while WTI crude prices rose 0.56 percent to 62.63 per barrel as of 3:35 PM IST.
SourceL BS
