Rupee slips 15 paise to 74.70 against US dollar in early trade

Last updated on July 8th, 2021 at 04:40 am

Today the Indian Rupee depreciated 15 paise to 74.70 against the US dollar in opening trade amid a weak risk appetite in the region. 

The U.S. dollar was seen heading for its biggest monthly rise since March supported by traders’ trepidation ahead of unpredictable U.S. labor data and concern over the spread of the Delta coronavirus variant.

The rupee, however, has seen a depreciating bias in recent weeks, after the Fed sounded more hawkish than anticipated earlier this month.

An economist from DBC Banks notes that they had expected Indian markets to be partly de-risked owing to the high foreign reserves stock as well as improved adequacy. And it is because U.S. taper tantrums gain traction.

It is also seen that India imports over two-thirds of its oil requirements. These rising oil prices could add to inflationary concerns and further complicate policymaking for the central bank which has vowed to keep monetary policy accommodative to support the pandemic-hit economy.

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Brent crude was trading up 0.7% at $75.28 a barrel by 1025 GMT and is set to record its seventh monthly gain in eight. An economist from the IFA Global Research says that the Brent crude is at its highest level in two years and is the key risk for the rupee…

A move above $80 per barrel could stoke concerns over inflation and the current account deficit. As the Indian rupee started on a weaker note against the broad dollar strength and weak regional risk appetite, other Asian currencies also have started to go weak against the American currency.

The Indian rupee posted its biggest monthly drop since the onset of pandemic India. This was even more pressured by high global crude oil prices and concerns over the U.S. Federal Reserve hinting at unwinding its massive stimulus. Giving all the signals that oil-importers are the key reason behind the currency fluctuation and fall in the market.