Indian Rupee Records New Low; Breaches 80-mark against US Dollar

The Indian currency depreciated for the eighth consecutive session on Tuesday to fall past 80-mark against the US dollar for the first-time ever.

The local currency opened the day at 79.98 per US dollar against the previous close of 79.97. Then, it immediately hit a record low of 80.0175 in early trade. Rising trade deficit, continuous outflow of foreign portfolio investors and rising crude oil prices have kept rupee under pressure for some time now.  It has dropped nearly 7 per cent against the US dollar this year. 

The Indian rupee has declined by about 25 per cent since December 31, 2014, finance minister Nirmala Sitharaman said in the Lok Sabha on July 18. The global factors such as the Russia-Ukraine conflict, soaring crude oil prices and tightening of global financial conditions are the main reasons behind the fall of rupee, finance minister pointed out. 

Foreign portfolio investors have withdrawn about $14 billion from Indian equity markets in 2022-23 so far, Sitharaman said. The outflow of foreign portfolio capital is a major reason for the depreciation of the Indian rupee, she added. 

India’s merchandise trade deficit widened to a record $26.18 billion in June. The trade deficit stood at $24.3 billion in May. Record-high trade deficit also added pressure on the domestic unit.

The US dollar hovered on Tuesday just above a one-week low reached overnight versus major peers.

The dollar index - which gauges the greenback against six counterparts - was flat at 107.47.