Ukraine War: Rupee remains under pressure due to many reasons including rise in crude prices and it may soon break 80 level against US dollar. This has been revealed in the Economic Times poll conducted among 14 brokerages, banks and treasury departments. Similar indications are given by the increasing demand for safe-haven assets in developed markets.
Poll participants said the currency market could see huge volatility in the next few weeks until a diplomatic solution was reached in the Ukraine war.
India’s external balance weak
India’s external balance is weak and high commodity prices may add to its concerns. Amit Pabri, MD, CR Forex, said, “The kind of situation that has emerged over the past one month is not expected to calm down easily.”
“The central bank can intervene but traders will not bet long on the rupee against the dollar due to weak fundamentals,” he said. FPIs are constantly selling in the risky emerging markets.
Rupee may fall till the level of 82
Experts believe that the rupee can fall to 77.93 in this calendar year. Two estimates that the rupee may fall to the range of 80-82 per dollar this year. “We see the rupee depreciating to 80 per dollar level in calendar year 2022,” said Saurabh Goenka, CEO, Zenith Fincorp. He said, the RBI can support the government’s borrowing program by keeping a more lenient stance than the Fed. “Weakness in rupee creates liquidity in the system and attracts foreign investors to the local debt market,” he said.
However, season traders expect the volatility to end relatively quickly.
Geopolitical risk is heavy
“If the rupee depreciates in the short term due to geopolitical risk, crude inflation and fund outflows, it is going to return to the five-year average, which is around 2.5 per cent,” said Abhishek Goenka, founder, IFA Global.
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