Both current as well as capital account are under pressure. “The rupee is likely to remain under pressure, until we do not break and close below 76.75 again. Kazi did not rule out the possibility of the rupee falling to 80 to the dollar during the year.Ībhishek Goenka, founder, IFA Global said “it is pretty possible’’ that the rupee could touch 80 by December. He warned there would be no respite even if the Ukraine war ended as the sanctions against Russia would remain which would keep commodity prices high. Kazi said that the odds are stacked against the rupee particularly given the fact that crude oil prices are trading above $100 per barrel. Moreover, if the US dollar interest rates do go up according to the indications available from the Fed, that certainly will be bad for emerging markets,’’ he added. There are no positives as such in favour of the rupee. “The rupee has a lot of catching up to do with currencies like the yuan which has depreciated by 4 per cent whereas we have done around 1.5 per cent. Imran Kazi, vice-president-risk advisory, Mecklai Financial Services admits the trend will remain bearish and the next couple of months could see the rupee heading towards 78.50 and thereafter settle down at 77-77.25 levels. A Reuters poll has forecast retail inflation at 7.5 per cent in April against 6.95 per cent in March.
Ī sustained depreciation leads to imported inflation, making it hard for the RBI to keep retail inflation within the threshold of 6 per cent. The RBI can also stabilise the domestic currency through either interest rate actions or dollar sales. If the interest rate actions of central banks hit growth and even leads to a recession as feared by some analysts, crude oil prices will fall, which is a positive for the currency. The rupee’s course will be determined by the performance of the global economy and the RBI’s action to check depreciation.
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