Monday 14 / October / 2024
Muscat: The Indian Rupee fell sharply on Friday, hitting Rs 84.09 level against US dollar.
On Sunday, the exchange houses in Oman were offering Rs 218.20 against the one Omani Rial – which is an all-time low.
Speaking to Times of Oman, R.Madhusoodanan, a financial expert based in Muscat said the reasons attributed to the steep fall of INR against the US dollar are the heavy withdrawal of money from the stock markets by the foreign institutional investors, a sharp bounce in the crude prices.
“The tension prevailing in the Middle East regions, a sustained strength in the US dollar index etc. During the last 8 trading sessions, foreign investors have withdrawn about $7 billion worth of equities from the Indian stock market,” he said.
He also said that of late the INR is on the defensive due to India’s shrinking Balance of Payments (BOP) surplus and a rise in merchandise trade deficit. “The cut in basic customs duty of gold, silver, platinum and mobile accessories in the last Union budget also negatively impacted the trade deficit,” he said.
It is fact that the currencies in the emerging markets had weakened during the year and the Yen also weakened significantly against the US dollar. “However, INR was trading in a range-bound level of 83-84 during the year, due to RBI’s intervention to keep the currency somewhat stable. The forex reserve of the country has crossed a record level of $700 billion and India is among four such nations of the world now,” he said.
In the short-term horizon, the outlook is that the rupee could see more pressure.
With the comfortable forex position, RBI might intervene to keep the rupee volatility minimum and a marginal fall. The likely cut in the interest rates by the US Fed in November, uncertainty in the crude prices, fluctuation in the dollar index, fear of recession in the US, switching of the asset class from equity to gold, etc will have a bearing on the rupee-dollar movement.
