Consequently, the Indian rupee weakened by 38 paise against the US dollar to 68.43 on Wednesday, from its previous close at 68.05 per greenback.
"Rupee has fallen in line with the other EM currencies. However, during 2018, rupee is still one of the worst four performers in the EM basket, along with Brazil, Turkey and Argentina," Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, told IANS.
"A cocktail of high crude oil prices, and an increase in US interest rates, along with uncertain domestic politics is playing the spoil sport for the rupee."
"Unless oil prices fall sharply, below $75 on Brent, Dollar-Rupee can aim for the all-time highs of 69 against the US Dollar. On the US Dollar index, we can see levels of 95."
Banerjee predicted an immediate range for Indian rupee to be between Rs 68 and Rs 68.70 per US dollar.
Apart from rise in US interest rates, persistent outflow of foreign funds from the Indian equity and bond markets has had an adverse impact on the rupee.
On Wednesday, provisional data with exchanges showed that foreign institutional investors sold scrips worth Rs 311.11 crore.
Besides fund outflows, geo-political tensions in the Middle East and supply side constraints have led to a surge in global crude oil prices. The latest Brent crude price hovered around the $79 per barrel mark.
According to Deepak Jasani, Head of Retail Research at HDFC Securities: "Strength in USD (dollar index up about half a per cent on May 23), continued selling by FIIs in equity and debt markets, weakness in other emerging market currencies like Turkish Lira and rise in crude prices (up another 0.8 per cent on May 23) were the key reasons for the fall in the INR on May 23, 2018."
"The INR ended down 0.56 per cent lower for the day at 68.43, barely 45 paise away from its all time low vs the USD."
(This story has not been edited by Social News XYZ staff and is auto-generated from a syndicated feed.)
