Mumbai, March 7 (IANS): High commodity prices as well as outflow of foreign funds from equity markets dragged Indian rupee to a new record low against the US Dollar.
Accordingly, rising prices of crude oil along with other commodities triggered by the Russia-Ukraine war had kept a weak pressure on the rupee.
The Ukraine crisis pushed Brent crude oil price to $130 a barrel on Monday.
Besides, the trend is expected to trigger an inflationary trend and ultimately a reversal in monetary policy.
Furthermore, it has accelerated FIIs' selling in the Indian equity market.
Consequently, the Indian rupee touched a new record low of 77.02 to a USD on Monday's trade session.
"Higher inflation, rising crude oil and commodity prices along with outflow of FIIs from the equity market are the major reasons for rupee depreciation," said IIFL Securities VP, Research, Anuj Gupta.
"We expect it to test 77.50 to 78 levels."
According to Kshitij Purohit Lead Commodities and Currencies, CapitalVia Global Research, "India's traditionally non-interventionist central bank may allow further depreciation of Asia's worst-performing currency since the start of the Ukraine conflict in the hope that a weaker rupee will increase export competitiveness and assist close gaps presumably widening due to rising oil costs."
"The rupee has lost another 1 per cent against the dollar since morning and trading at 76.87, it made a high of 77.08 in the morning."
In addition, Devarsh Vakil, Deputy Head of Retail Research, HDFC Securities, "The Indian rupee weakened on mounting concerns of higher trade deficits on account of surging crude oil prices. Deteriorating risk on sentiments is likely to result in postponement of expected large IPO fund-flows."
"Incessant FPI selling in equity markets is also putting pressure on the Indian currency."