Amid the weak global cues, the depreciation in Indian Rupee is likely to continue and it may also breach Rs 80 per dollar in fortnight’s time, an economist at Bank of Baroda said in a report on currency movement.

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 “We expect INR (Indian Rupee) to remain under pressure in the near term and trade in the range of 79.75-80.15/$ in the next fortnight, with the Fed policy action providing further clues, an Aditi Gupta Economist at Bank of Baroda said.

While reasoning, she pointed out that the adverse global environment along with rising concerns on the external front are likely to weigh on the rupee going forward.

In the last trading session, INR fell to a record low of US$ 79.88/$, just shy of the 80/$ mark. The previous low was 76.84/$ in Apr’20, during the peak of the Covid-19 crisis.

According to Gupta, the expectations that the Fed might hike its policy rate by 100 basis points next week after the inflation report along with increasing risks of a global recession are underpinning the dollar strength.

Global currencies depreciated against the dollar as a hotter than expected US inflation report drove the currency higher, she noted. In this regard, EUR has been particularly impacted, falling below the crucial dollar-parity level for the first time in 20-years and INR too has been no exception, she said.

INR has depreciated by 1.1 per cent outperforming the MSCI EM index. It has fared well as the median depreciation in the above sample of currencies was 2 per cent against other currencies.

The rapid depreciation in INR seen presently is driven to a large extent by adverse global factors, particularly a strengthening USD and FPI outflows. Besides, India’s external position which remained strong in the last 2 years, attributable to the Covid-19 pandemic, has deteriorated quite a bit.

Trade deficit is at a record-high and this coupled with persistent FPI outflows has put pressure on the balance of payments which is also weighing on the rupee, the economist added.