Rupee to remain under pressure amid global cues and covid concerns, down 2.4% in June: Report

Indian Rupee spot depreciated over 2.4 per cent in June mostly hurt by a sharp rebound in dollar Index, fresh concerns of Delta Variant of COVID-19 and rally in crude oil prices, a brokerage Anand Rathi Share and Stock Broking Limited said in a monthly currency report on Monday.

Indian Rupee had made a sharp rebound in May 2021, but the relief did not last long as volatility continued in June as Rupee depreciated sharply by over 2 per cent breaching 74-mark as the dollar regained traction after the Fed dot plot indicated at least two rate hikes in 2023, the report pointed out.

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On the domestic front, measures announced by Finance minister Nirmala Sitharaman to give a boost to healthcare and tourism sectors were seen as additional fiscal plans that may stress the government’s budget, the brokerage report on currency also mentioned.

This made investors cautious and pushed Indian Rupee to a two-month low of 74.45 in the last trading session of June as investors awaited US labour report for clues on the US economic outlook.

The brokerage firm expects the Indian Rupee spot is expected to remain under pressure and may depreciate towards 75 levels on limited global risk appetite with lingering COVID-19 concerns and fears of stimulus withdrawal by the US earlier than expected after a hawkish hint in the June policy.

Similarly, a stronger dollar index coupled with increased volatility in crude oil prices following indecision in the latest OPEC plus nations may exert pressure on the domestic currency, the report further said.

While on the other hand, Dollar Index gained nearly 3 per cent in June as widely watched Fed dot plot indicated at least two rate hikes in 2023, compared to no rate hikes until at least 2024 projected in the March meeting, Anand Rathi brokerage firm said in the monthly currency report.

The dollar looks positive for July and may touch 92.5 levels as Fed officials brought forward rate hike projections to 2023 amid inflationary pressure which is likely to stay for the coming months, the report said, adding further that the resilient economic outlook for the US would be supportive for dollar.