New Delhi: The Indian rupee’s slide against the US dollar has reached new lows. Donald Trump’s win in the US Presidential polls has infused confidence in markets and strengthened the greenback. This has led to a decline in the rupee’s value compared to the US dollar, a development which could have implications for inflation, according to ANZ Research economist Dhiraj Nim.
Foreign investors are pulling out their money from Indian markets leading to a decline in the key indices. The FPI selloff has continued initially owing to the China stimulus package and more recently owing to the political changes in the US.
What does a costly US dollar mean for India
A stronger dollar means costlier imports, especially when it comes to crude oil, according to economist Akash Jindal. A stronger greenback is also likely to drive up inflation which is already growing at a faster clip. However, there are also some advantages to it since exporters will be able to earn more. Further, remittances to India are expected to rise, added Jindal.
The rupee on Wednesday closed at 84.38 per US dollar, up from 84.40 per US dollar at market opening. However, the Indian rupee improved from Tuesday’s closing price of 84.39 per US dollar.
Rupee-dollar target
Analysts have given a target price of 85 per US dollar for the Indian rupee. To be sure, intervention is expected to slow down the rupee’s slide to the 85-mark, according to Praveen Singh, AVP, Fundamental Currencies and Commodities, at Sharekhan by BNP Paribas. The rupee is likely to receive support at 84.25/84 levels. Singh added that there may be resistance at 84.50/84.75 levels.
The dollar index, which measures the dollar’s value against 6 hard currencies, slipped 0.05 per cent to 105.97. Brent crude prices which may turn dearer for India given he rupee slide, were up 0.64 per cent to $ 72.35 per barrel.
The rupee’s value continued to decline in comparison to the US dollar on Wednesday, Here’s why Economy Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
