SME Times News Bureau | 20 Aug, 2018
The Indian currency which had collapsed to a historic
intra-day trading low of 70.40 before closing at fresh lifetime low of 70.15
per dollar on Thursday, will stabilize soon, said a top official on Saturday.
"This breaching of 70 (mark) was on account of external factors largely on
what happened in Turkey. Our fundamental equation for the trade has not been
changed. Oil prices have not gone up.
"The demand-supply situation for dollars in the Indian economy has not got
altered... our perception is that very soon it (rupee) will stabilise and it
might go back to Rs 68-69," Union Finance Ministry's Department of
Economic Affairs Secretary Subhas Chandra Garg said.
On Thursday, the rupee had touched an all time low of 70.39-40 in the spot
market and settled at a record closing low of 70.16 against the greenback.
Speaking on capital outflow, Garg said: "There was an outflow of $9
billion in terms of portfolio investments in the first three months of the
current fiscal and last year, we had a inflow of $20 billion. But in July, there
was no outflow. In August, there is positive inflow of about $1.5
billion."
Meanwhile, experts viewed that geo-political tensions between US and Turkey,
along with fears of a rise in protectionist measures and outflow of foreign
funds are expected to mount pressure on the Indian rupee in the coming week.
"Last week was exceptionally volatile, due to Turkish crises and Chinese
Yuan devaluation. However, things have calmed down a notch on Friday, due to
upcoming dialogue between Chinese and US representatives on trade, to be held
in US by end of August," Anindya Banerjee, Deputy Vice President for
Currency and Interest Rates with Kotak Securities, said.
"However, S&P has downgraded Turkey to B+ and warned that risk remains
elevated for a recession next year as well as hard landing for the financial
sector. As a result, we can see renewed pressure on Lira next week. However,
RBI intervention may keep the rupee supported. As a result, we expect a range
of 69.50-70.50 on spot for the next week."
According to Anand Rathi Shares and Stock Brokers' Research
Analyst Rushabh Maru said: "Even though India's CPI and WPI have eased in
July, this is just a temporary phase. Sharp depreciation in the rupee and
higher crude oil prices may once again push inflation higher. The US dollar
index is trading around multi-month high levels."