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Rupee Closes Below 73 Mark Against Dollar For First Time: 10 Things To Know

Analysts expect the rupee to remain under pressure against the dollar amid projections of a further rise in crude oil prices.

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Rupee Closes Below 73 Mark Against Dollar For First Time: 10 Things To Know

Analysts see the rupee falling further to 73.93-74.31 levels going forward

The rupee declined sharply lower against the US dollar to close at a record 73.34 on Wednesday, amid soaring crude oil prices. The rupee touched a fresh all-time low of 73.42 against the American currency during the session, but contained some of those losses by the end of the session. The government will hold an inter-ministerial meeting on Thursday to discuss currency weakness and its impact on trade deficit. Analysts say concerns on surging crude oil prices and widening of currency account deficit along with a rising dollar backed by strengthening of the US economy impact the rupee.
Here are 10 things to know:
  1. The Reserve Bank of India (RBI) began a three-day bi-monthly policy meeting on Wednesday. In the central bank's statement due on Friday, investors will keenly look out for any move on key lending rates and further steps to support the currency.
  2. "Higher crude prices are likely to prevail over liquidity easing measures announced by the RBI. The next domestic trigger would be the tone of the RBI policy on Friday," said IFA Global, a forex advisory firm.
  3. Analysts expect the rupee to remain under pressure against the dollar amid projections of a further rise in crude oil prices.
  4. The rupee can fall further from the current level to around 73.93-74.31 against the dollar, Hem Securities director Prateek Jain told NDTV.
  5. Commerce and Industry Minister Suresh Prabhu will chair an inter-ministerial meeting on Thursday to discuss rupee depreciation and widening of trade deficit, news agency Press Trust of India cited an official as saying. Representatives from the department of economic affairs, coal ministry, steel ministry, oil ministry and department of pharmaceuticals are expected to attend the meeting, the agency reported.
  6. Crude oil prices traded below a four-year high as investors anticipated a widening of supply going forward. Brent crude - the global benchmark for crude oil - slipped below $85 a barrel, reversing gains registered earlier in the session. Still, crude oil price was not far from a November 2014 high of $85.45 a barrel hit on Monday. (Also read: Why crude oil prices have spiked)
  7. "Oil prices has been sustaining on expectations of tighter supply once US sanctions start targeting Iran's petroleum industry from next month," said VK Sharma, head private client group and capital market strategy at HDFC Securities.
  8. Crude found some support from expectations that US sanctions on Iran will further cut the OPEC country's oil exports, tightening supplies and straining the ability of other major producers. The US has imposed sanctions on Iranian crude exports which will come into effect on November 4.
  9. Extended weakness in the rupee comes despite the RBI announcing bond purchases worth Rs. 36,000 this month to ease liquidity.
  10. The rupee had closed at 72.91 against the greenback on Monday. The forex markets remained shut the next day.

(With agency inputs)





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Highlights

1
Rupee closes slightly higher from all-time low of 73.42 hit on Wednesday
2
Analysts expect rupee to remain under pressure due to high crude oil rate
3
Government to hold meeting to discuss rupee weakness on Thursday

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