INDIA: Following heightened fears over tighter supplies throughout the world due to crude oil, the Indian rupee plunged to a shocking new low on Tuesday, touching the 80-mark for the first time against the US dollar. This was the eighth session in a row that the rupee has fallen.
At 9.10 am, the rupee was trading at 80.01 dollars, down from 0.03% from its previous close. It opened again at 79.99 and reached a new record low of 80.02.
Overnight crude oil prices hiked over 5% after Saudi Arabia declined to promise any output increases following a visit by US President Joe Biden. As per the reports, disruption along the Keystone pipeline has cut shipments of some Canadian oil to US refineries.
Oil markets have been caught in the crossfire between supply as Western sanctions on Russian crude and fuel supplies have disrupted trade networks to refiners and end-users.
Oil investors are also waiting for the US Federal Reserve’s meeting on July 26-27 to witness the central bank’s aggression in raising interest rates to tackle rising inflation. It has been reported that the latest US data reinforce policymakers’ support for another 75 basis point hike.
In its latest note, the Bank of Baroda has made the following statement, “Adverse global environment along with rising concerns on the external front are likely to weigh on the rupee going forward. We expect the rupee to remain under pressure in the near term and trade in the range of 79.75-80.15 per dollar in the next fortnight, with the Fed policy action providing further clues.”
The Indian rupee has endured a number of trying circumstances, including foreign investors, growing trade and current account deficits, and a worldwide rush to US dollars in response to increased threats of a global recession.
This year, foreign fund outflows from the country have been more than the combined inflows of the last two years, with foreign investors extracting a record $29 billion from Indian assets this year.
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