- The Indian rupee fell 8 paise to close at a record low of 95.71 against the US dollar
- The fall followed a government hike in import duty on gold, silver, and platinum
- The rupee opened at 95.58 and hit an intraday low of 95.8 on Wednesday
The Indian rupee plunged 8 paise to a new record closing low of 95.71 against the US dollar on Wednesday. The sharp fall came after the Indian government hiked import duty on gold, silver and platinum amid uncertainties over US and Iran tensions.
It had opened at levels of 95.58 and hit a fresh all-time low of 95.8 intraday.
On Tuesday the legal tender had depreciated 35 paise to close at 95.63 against the US greenback.
The Rupee's fresh dive goes beyond the currency market, and reflects high pressures on the currency at the macro level, as per experts.The crude oil price surge triggered by the Iran war caused energy disruption has, in turn, strengthened the US dollar.
“The rupee closing at a fresh record low of 95.71 against the US dollar, weaker by 8 paise, reflects a clear macro pressure point for India. This is not merely a currency-market move; it signals stress from elevated crude prices, sustained foreign portfolio outflows and stronger dollar demand from importers," highlighted Harshal Dasani, Business Head, INVAsset PMS
He added that the intraday weakness toward 95.80 also suggests that the market is actively testing the RBI's tolerance band.
"While policy measures around precious-metal imports may offer some short-term support, India's larger vulnerability continues to come from its energy import bill," Dasani stated.
Impact On Equity?
The stock market impact is going to be diverse and non-uniform, as per Dasani.
"For equities, the impact will be uneven. A weaker rupee can support IT services and export-oriented pharma, but it raises cost pressure for oil marketing companies, airlines, paints, chemicals and other import-dependent sectors," he underscored.
Additionally, he said that the key risk is sentiment. If the rupee remains under pressure while crude stays firm, investors will start pricing in higher inflation risk, margin compression and pressure on the current account.
RBI To Rescue Rupee?
According to experts while RBI intervention can reduce volatility, a sustained recovery in the rupee will need either softer crude prices, weaker dollar momentum, or a meaningful return of foreign inflows.
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