 "Rupee")
The rupee weakened 0.26 per cent against the US dollar in July, remaining largely stable, even as bouts of volatility prompted the Reserve Bank of India (RBI) to intervene.
On the last trading day of the month, the rupee closed almost flat at 82.25 a dollar, as compared to 82.26 on Friday. Rupee traded in a narrow range — 82.19 to 82.30 a dollar — as oil companies continued buying while others were sellers in the market.
After depreciating 7.77 per cent against the dollar in FY23, the rupee was stable in this financial year so far, while the RBI capped gains to stock up the foreign exchange reserves.
For the week ended July 21, foreign exchange reserves were at $607 billion as compared to $562 billion on December 30, 2022.
Going ahead, the spike in oil prices is seen as a headwind for the Indian currency.
“The major problem for the rupee is the rising oil prices, which due to Saudi cuts, are at almost $85 per barrel. This could pose a problem for the trade deficit and current account deficit of India,” said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
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“FPI investments in the past three days are also slowing down, with $3.2 billion being induced in the past 15 days, significantly down from $8 billion but still on the positive side,” Bhansali said.
