On Tuesday, the rupee once again witnessed a historic fall. The rupee crossed the level of 91 against the dollar for the first time. The special thing is that in just 10 trading days the rupee went from 90 to 91 against the dollar. According to the data, the rupee had crossed 90 against the dollar for the first time on November 2. According to experts, the main reasons for the fall in the rupee are profit-booking by foreign investors and delay in the trade deal between America and India.
The surprising thing is that there is a decline in the prices of crude oil in the international market. According to experts, the rupee can cross the level of 92 against the dollar in this month itself. In the current year, the rupee has fallen by more than 6 percent against the dollar. Let us also tell you at what level the rupee is trading against the dollar.
Devastation in currency market, historic fall in rupee
The devastation in the currency market continued on Tuesday and a historic decline was seen in the rupee against the dollar. During the trading session, the rupee fell by 36 paise and crossed 91 against the US dollar for the first time. Rupee declined due to continued withdrawal of foreign investors (FII) and uncertainty over India-US trade deal.
The rupee fell from 90 per dollar to 91 in the last 10 trading sessions. The local currency has fallen 1 percent against the US dollar in the last five sessions alone. According to foreign exchange traders, the rupee may also cross the 92 per dollar mark this month.
At 11:45 am, the rupee was trading at 91.14 against the US dollar, 36 paise lower than its previous close. In the Interbank Foreign Currency Exchange market, the rupee opened at 90.87 against the US dollar and continued to fall as the session progressed. On Monday, the rupee closed at a new all-time low of 90.78 against the US dollar, which is 29 paise lower than the previous closing price.
Why is the rupee falling?
Anil Kumar Bhansali, head of treasury and executive director, Finrex Treasury Advisors LLP, said a US-India trade deal is unlikely to happen soon because (US President) Donald Trump does not seem keen on a deal without agricultural issues and India has clearly opposed it. Due to this reason the rupee crossed 91 and may even reach 92 this month.
He further said that fluctuations in buying and selling, depreciation of rupee due to tax clearance, buying of oil by speculators, absence of trade agreement, storage of dollars by exporters, withdrawal of funds by foreign investors and debt sales are the reasons for the fall of rupee. He also said that despite the decline in trade deficit on Monday, the local currency did not improve.
From inflation to decline in dollar index
According to exchange data, foreign investors sold shares worth Rs 1,468.32 crore on Monday. Moreover, according to government data, wholesale price inflation in November remained negative (-) 0.32 per cent for the second consecutive month, although prices of food items like pulses and vegetables had increased month-on-month. Inflation based on Wholesale Price Index (WPI) was (-) 1.21 percent in October and 2.16 percent in November last year.
Meanwhile, the dollar index, which measures the dollar’s strength against a basket of six currencies, was trading 0.03 per cent lower at 98.27. In the international market, Brent crude oil of Gulf countries was trading 0.61 percent lower at US $ 60.19 per barrel in futures trading. Talking about the domestic stock market, the 30-share benchmark index Sensex fell 363.92 points to 84,849.44 in early trade, while Nifty fell 106.65 points to 25,920.65.
