No Relief For Rupee? Indian Currency Could Fall Even Further To 84-85 Per US Dollar By March 2023: Report??

After sliding past the 82 per US dollar mark and hitting its new all-time low of 82.33 last Friday, the rupee fell further to reach another all-time low yesterday.

And the wait for the rupee to find the light at the end of this dark tunnel of continuous fall seems to be getting longer, as UK-headquartered Elara Global Research has indicated a further fall.

It was mentioned in a note yesterday that the Indian rupee could drop to 84-85 to the dollar by March due to rising crude oil prices, a high trade deficit and depleting foreign exchange reserves.

This comes amidst the rupee hitting another new record low of 82.6825 on Monday.

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"The rupee, so far, has borne the brunt of aggressive global tightening as a hawkish (U.S.) Federal Reserve and interest rate differentials weigh on its outlook," Garima Kapoor, an economist at Elara, said, as per a Reuters report, adding, "Elevated trade deficit prints and the recent surge in crude oil prices add to the near-term headwinds."

She expects the The rupee is expected to fall to 83.50 per U.S. dollar by December, before slipping even further to 84-85 by March 2023, as per the report.

Meanwhile, India's foreign exchange reserves were $532.66 billion as of September 30, 2022, the lowest level since July 2020. That is a nearly 16% drop from $633.6 billion at the start of the year. This decline, Kapoor pointed out, is the highest among emerging market peers, as per the report.

"Another risk could be from a possible plan by the RBI to raise foreign capital via NRI (non-resident Indian) bonds," she said, reportedly adding, "An outcome that's possible if import cover falls decisively below seven months (from about nine months now)."

Also Read: RBI Report Says The Worst Of Inflation May Be Over

Rupee Falls Further After US Releases Jobs Report

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The rupee extended its recent downfall to a new record low of 82.6825 yesterday, following the U.S. jobs report. Higher-than-expectedjobs additions in September 2022 and an unexpected dip in the unemployment rate in the US cemented bets of another 75 basis point Fed rate hike next month, thus further pressuring the rupee.

Rising oil prices have added to the challenges. Brent crude jumped more than 11% last week after OPEC+ announced its largest supply cut since 2020, despite concerns that could lead to a recession. Brent crude was last at $97.04, near six-week highs, as per a Reuters report.

Also Read: How RBI Creates & Distributes Indian Rupee Banknotes

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