Experts predict dip in rupee may go on

Mumbai: While the rupee took a breather and recovered from its all time low against the US dollar, forex market participants expects currency volatility to continue amid frictional geo politics, sustained fears of escalation of trade wars into currency wars and possible tightening of global conditions.

“As global investors remain wary of the emerging market forex positioning, further near term broad dollar strength cannot be ruled out. We have been highlighting about intrinsic pressure on the currency, but the pace with which it plunged took us by surprise. The currency can further see new lows against the dollar from here on unless we see some sustained stability in global forex space,” said Edelweiss Financial Services. It expects the rupee to move in the range of 68-72 a dollar for remainder of FY19.

On Tuesday, the Indian rupee closed the session on a flat note at 69.83 a dollar. Last week, the local currency had hit a historic low of 70.40 in the intra-day trade before closing at 70.15 a dollar following a rout in emerging market risk assets.

Edelweiss Financial Services added that the domestic vulnerabilities in the form of widening current account deficit (CAD) to 2.9 per cent of the gross domestic product (GDP) and balance of payment (BoP) deficit possibly to the tune of $30 billion in FY19 along with concerns regarding fragile fiscal dynamics will continue to weigh on the Indian rupee.