Finance
The rupee fell 41 paise to close at 81.93 (provisional) against the US dollar on Tuesday, after the Economic Survey 2022-23 said the domestic currency could remain under pressure due to a plateauing of exports and a subsequent widening of the current account deficit.
Significant foreign fund outflows, as well as a flat trend in domestic equities, according to forex traders, have dampened investor sentiment.
At the interbank foreign exchange, the domestic unit opened weak at 81.61 per US dollar before falling further to fall below the 82 per US dollar mark. The rupee eventually ended at 81.93, down 41 paise from its previous close.
The local unit reached an intra-day high of 81.58 and a low of 82.07 against the US dollar . In the previous session on Monday, the rupee settled at 81.52 against the American currency.
Meanwhile, the dollar index, which measures the strength of the US currency against a basket of six currencies, rose 0.15 percent to 102.43.
Brent crude futures fell 1.18 percent to USD 83.90 per barrel, the global oil benchmark.
Forex traders said investors are bracing for the Federal Reserve’s interest rate decision and the Union Budget for 2023-24, both of which are scheduled to be announced on Wednesday.
According to the Economic Survey, the Indian rupee may remain under depreciation pressure as exports plateau and the current account deficit widens.
According to the most recent data, the country’s current account deficit (CAD) increased to 4.4 percent of GDP in the third quarter ended September from 2.2 percent in April-June due to a larger trade gap, as per latest data of the Reserve Bank of India.
While commodity prices have fallen from record highs, they remain above pre-conflict (Russia-Ukraine war) levels, according to the survey.
Strong domestic demand, combined with high commodity prices, will raise India’s total import bill and contribute to negative developments in the current account balance, according to the report.
“These may be exacerbated by plateauing export growth on account of slackening global demand. Should the current account deficit widen further, the currency may come under depreciation pressure,” said the key document released a day before presentation of Union Budget 2023-24.
The 30-share BSE Sensex was trading 49.49 points, or 0.08 percent, higher at 59,549.90 in the domestic equity market. The NSE Nifty gained 13.20 points, or 0.07 percent, to 17,662.15.
According to exchange data, foreign institutional investors (FIIs) were net sellers in the capital markets on Monday, offloading shares worth Rs 6,792.80 crore.
Source:BS
