The Rupee fell to a record low on Monday, trailing its regional peers amid growing concerns over rising deficits in a major oil importer like India, where the aim of ensuring export competitiveness weighed on the extent of the central bank's intervention on the exchange rate. markets. could determine. Shares fell on fears of slowing global growth amid fears that central banks will tighten further to stifle inflation. A tighter lockdown in Shanghai added to investor concerns.

The Rupee lost 0.72% on Monday to close at 77.46 to the dollar, beating its previous high of 76.97 set on March 7.

“With the sale of Life Insurance Corporation of India (LIC) shares behind us, macro factors such as oil, dollar strength and weaker peer currencies combined to put pressure on the rupee,” Bhaskar Panda said, Executive Vice President of HDFC Bank. “We haven't seen any desperate attempts to stop the rupee. The local unit could still slide if the general trend does not change”.

     

RBI intervention

To be sure, the rupee continues to perform relatively better among emerging Asian economies, especially when compared to China. The yuan is down 5.52% this year. The rupee is down more than 4% against the dollar this calendar year, ranking sixth among its Asian peers.

The Sensex ended Monday down 0.7% at 54,470.67 and the Nifty closed a similar decline at 16,301.85 after falling 4% on Friday and posting its worst weekly loss since November. "These risks mean markets will tend to fall over the medium term," said Piyush Garg, CIO, ICICI Securities. “Markets could correct another 10-15% from current levels and trade close to 16 PEs going forward if interest rates rise significantly more from current levels and deposit rates may banks exceed 7%". intervened through the futures market in its attempt to protect foreign exchange reserves, traders said. The volume of the intervention is estimated at less than a billion dollars, the minimum necessary to avoid abrupt changes.

"It was moderate intervention by the RBI on Monday," said the chief executive of a major bank. The Bloomberg Dollar Index, which measures the unit against other major currencies, rose to 103.84, its highest level since Dec. 31, 2002. higher interest rates. said Hemant Mishr, co-founder and CIO of SCUBe Capital, a Singapore-based global fund. “The dollar's rally is broad and in line with market fundamentals. The Rupee should not remain out of sync, especially when the value of the yuan falls sharply, as this will affect India's export competitiveness.”


Also Read: Higher FD rates and stocks market correction to test retail investors