The fresh fall in rupee value has triggered expectations of another round of spike in remittances by expat Indians, especially from the Gulf region, to India
The India rupee on Thursday hit an all time record low of 80.73 against the US dollar, down by almost one percent in the morning trading hours from Wednesday’s closing of 79.97.
The Indian currency’s fall followed the US Federal Reserve hiking interest rates by 75 basis points on Wednesday and giving a more hawkish than expected projection for future rate cuts.
This has led to the US dollar index hitting a new 20-year high at 111.72, plunging currency exchange values in Asia and elsewhere.
The Kuwaiti dinar touched all time high against the Indian rupee trading at 260.9 to one Kuwaiti dinar
The fresh fall in rupee value has triggered expectations of another round of spike in remittances by expat Indians, especially from the Gulf region, to India.
Historically, the weakening trend of rupee led to a surge in non-resident Indian (NRI) remittances to the South Asian country, as expats can earn more bucks for each dollar remitted.
NRIs based in the Gulf region account for a larger chunk of expat remittances to India.
Rupee’s previous record low against the greenback was 80.12 reached late in August.
Currency market experts expected further strengthening of the dollar index in near-term, adversely affecting the rupee value.
The dollar rose to fresh 20-year highs on Wednesday and the euro tumbled to a new two-decade low as rising energy prices cast a long shadow over the euro zone’s economy but bolstered the U.S. currency’s safe-haven appeal.
The dollar and euro were little changed after the release of minutes from the Federal Reserve’s meeting in June, when the U.S. central bank hiked interest rates by an outsized 75 basis points in an effort to corral inflation.
Earlier, the dollar index , which tracks the greenback against six currencies, shot above 107 while the euro tumbled below $1.02, both levels last seen in December 2002. The index is up 12% year to date and is set for its best year since 2014.
The dollar has strengthened as energy prices are high and the Federal Reserve has been raising interest rates more quickly than most other central banks, said Shahab Jalinoos, global head of macro trading strategy at Credit Suisse.
The British pound alsoy plummeted to its lowest level against the U.S. dollar since 1985.
Source: Agencies