MUMBAI: The rupee weakened by 44 paise to close at 79. 16 from Tuesday’s close of 78. 72.
Dealers said that the rupee opened weak over concerns of a widening trade deficit. There was also some bulk demand for dollars, which dealers assumed would have been from oil companies or towards government’s defence purchases.
Trade deficit widened to a record $31 billion in July 2022, with exports dropping 12. 2% month-on-month while imports were steady. “The July print of the trade deficit possibly reflects the peak in the monthly deficit run rate, given that most of the global commodity complex has peaked and corrected significantly. Be- sides, the dramatic rise in oil deficit is unlikely to sustain with easing export taxes and a possible reduction in domestic demand due to passing of the peak summer months,” said Emkay Global Finance lead economist Madhavi Arora.
United Financial Consultants managing partner K N Dey said, “Having seen the rupee at 80, importers were scrambling to cover their positions and rushed to buy dollars following Tuesday’s appreciation. The volatility is in both ends of the market. The next event that everyone is watching for is the RBI’s monetary policy committee and expectations are that the hike will be at the lower end. ”
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