New Delhi: The rupee closed at a record low of 83.27 against the dollar on Monday, September 19, due to rising crude oil prices and a stronger greenback.
Apart from elevated crude oil prices and a strong US dollar, some forex traders attributed the rupee depreciation to several other factors including foreign fund outflows and a widening trade deficit.
Brent and WTI have climbed for three consecutive weeks to touch their highest since November and are on track for their biggest quarterly increases since Russia’s invasion of Ukraine in the first quarter of 2022, reported Reuters.
Separately, India’s trade deficit in goods hit a 10-month high in August at $24 billion. The last time it exceeded $24 billion was back in October 2022.
Meanwhile, India’s forex reserves dropped by $4.992 billion to $593.904 billion for the week ended September 8, the Reserve Bank of India said on Friday.
Dilip Parmar, research analyst at HDFC Securities, told news agency PTI: “This week will remain highly volatile following a series of central bank policy rate meetings across the developed and emerging market economies. The baseline of it is the dollar to hold onto its strength through the week.”
To stabilise the currency, the Reserve Bank of India either purchases or sells foreign money.
In July, RBI bought a net $3.5 billion worth of foreign currency, according to the central bank’s monthly bulletin. The central bank purchased $5.3 billion and sold $1.8 billion of foreign currency in July, reported Business Standard.