Rupee Falls Further; May Slip To 88, Say Experts
According to Jamal Mecklai, Chief Executive Officer at Mecklai Financial Services, the rupee is possibly on its way to the 88 mark.
Mumbai: The Indian rupee fell to its weakest level since mid-March on Thursday as the Middle East conflict threatened to escalate, while the US Federal Reserve kept interest rates unchanged for the fourth consecutive time. Experts anticipate the rupee may depreciate to the 88 level amid concerns over US President Donald Trump’s ‘Big Beautiful Bill’, potential US entry into the Iran-Israel war, and further escalation in the Middle East that could disrupt oil supply routes and push crude oil prices higher.
Thursday marked the third consecutive day of rupee depreciation, logging a loss of 69 paise. At the interbank foreign exchange, the domestic unit witnessed heavy volatility. It opened at 86.54 against the greenback and touched an intra-day high of 86.49 and a low of 86.89 before slightly paring losses to close at 86.7225 against the US dollar, down 30 paise from its previous close.
According to Jamal Mecklai, Chief Executive Officer at Mecklai Financial Services, the rupee is possibly on its way to the 88 mark. “There are several upcoming events that could create market shocks and drive the rupee lower — the passage of Trump’s Big Beautiful Bill expected by July 4, the next tariff deadline on July 9, and, of course, the Iran-Israel war, which could result in the Strait of Hormuz being mined and closed to shipping at any time. A weaker rupee is certainly a possibility. However, if the rupee climbs above the 85.79 level, this target would be aborted.”
“It is very possible that the rupee could cross 88 if the war escalates with US involvement and oil touches $80 per barrel,” said Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors.
“Today, the RBI may have sold at 86.70, but it was not supporting the rupee as aggressively as it did in March when the rupee rose from 87.95 to 83.75. FPIs and oil companies continued buying dollars for outward remittances, while exporters held back dollar sales, anticipating further rupee weakness. Exporters should consider selling on every 40 paise uptick to cover their exports, as we never know where the peak will be,” Bhansali added.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.02 per cent higher at 98.92 on safe-haven demand. However, momentum remained capped as investors digested the Fed's reluctance to act decisively.
The US Federal Reserve kept interest rates on hold despite Donald Trump’s demand to cut them by 250 basis points.
Brent crude, the global oil benchmark, rose 0.25 per cent to $76.89 per barrel in futures trade.
