Guwahati: The Indian rupee is anticipated to depreciate even further after Thursday’s record lows versus the dollar as the US Federal Reserve hinted at additional and more aggressive rate hikes to combat inflation.
The rupee depreciated from the previous session’s value of 79.9750 to an opening record low of 80.2850 per US dollar.
The US Fed increased interest rates by 75 basis points, as anticipated, and hinted at future increases and the fact that they would remain high until 2024.
Chinese yuan fell below 7.10 to the dollar as Asian currencies opened weaker. Anil Bhansali, the head of treasury at Finrex Treasury Advisors, stated: “The rupee is (likely to weaken) after the aggressive Fed Reserve commentary.”
According to Samir Lodha, managing director at QuantArt Market Solutions, the rupee would further deteriorate if the Reserve Bank of India (RBI) opted to take a backward step.
He said, “Once RBI allows INR to trade beyond 80 on a consistent basis, I expect rupee to head towards 82.0 in a couple of months on account of the trade deficit and due to global recession and money supply tightening.”
Venkatesh Srinivasan, the founder and managing partner of Rockfor Fincap, predicted that the rupee would continue to decline with RBI action to manage it when needed.
Arnob Biswas, head of FX at SMC Global Securities, believes that any intervention by the RBI this time will likely be less forceful.
Biswas said, “RBI may not be aggressive considering the hawkish side of Fed. On top of that substantial drop in net liquidity in the system may warrant to do so.”