Rupee closes down 32 paise at almost one-month low

On Wednesday, the rupee closed at an almost one-month low against the Dollar due to banks’ buying Dollars on behalf of their clients, oil marketing companies and foreign portfolio investors.

The Indian rupee (INR) closed at 82.57 per Dollar (USD), down 32 paise from its previous close of 82.25.

Anindya Banerjee, Vice President, Kotak Securities Ltd., said: “The news of the downgrade of US debt triggered risk aversion in financial markets. Demand for safe-haven assets drove the US Dollar higher, as it is a global reserve currency. Over the near term, we expect USDINR to trade within a range of 82.20 and 82.85 on spot,” Banerjee said.

Fitch downgraded the United States’ Long-Term Ratings to ‘AA+’ from ‘AAA.

The credit assessor said the rating downgrade of the United States reflects the expected fiscal deterioration over the next three years, a high and growing general government debt burden, and the erosion of governance relative to ‘AA’ and ‘AAA’ rated peers over the last two decades that has manifested in repeated debt limit standoffs and last-minute resolutions.

Amit Pabari, MD, CR Forex Advisors, said a rally in crude oil prices is exerting pressure on the local currency. He noted that there’s an inverse relationship between crude oil prices and the rupee, largely due to the country’s high dependency on oil imports.

Banks bought Dollars on behalf of their FPI clients, who sold some of their investments in the equity market to park the proceeds in safe haven assets following the downgrade in the US’ rating.