India rupee could fall to 82 to a dollar, says report

Market


NEW DELHI: The Indian rupee could touch 82 to a dollar, as the Reserve Bank of India (RBI) is unlikely to aggressively defend the domestic currency against the US greenback, according to a research report by Bank of Baroda.

The rupee closed at record low of 80.98 against the greenback on Friday, weighed down by the strong dollar overseas and risk-off sentiment among investors. Escalated geopolitical tensions in the Ukraine and rate hike along with a hawkish commentary from the U.S. Federal Reserve have battered riskier assets.

“Given the global backdrop of a strong dollar and continued weakness in other currencies, it seems likely that the RBI may not be as aggressive as in the past to curb the decline in the exchange rate. Hence, we may see the rupee depreciating further, and a move closer to 82/$ cannot be ruled out. Everything depends on what the RBI does and absence of active intervention will be interpreted as the present range around 81/$ being acceptable,” a Bank of Baroda report said.

Currencies worldwide fell sharply on Thursday following the Fed’s vow to fight inflation, with the Indian rupee among worst hit against the dollar.

The report said that the Fed’s stance was much more hawkish than expected which explains the turmoil in the markets. Stock indices slid, global yields rose and currencies have declined since, it added.

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