The rupee was on a free fall on Tuesday tanking by 41 paise to close at a new low of Rs79.36/$. The situation was only worsened by an inordinately strong dollar. While FPI flows were still negative at $35 billion since October, 2021; the real worry was the CAD. Trade deficit for June at $25.63 billion, raised fears of a spik in current account deficit. With weak forward premia in the dollar forward market the tone was set for a sharp fall in the rupee.
The rupee was on a free fall on Tuesday tanking by 41 paise to close at a new low of Rs79.36/$. The situation was only worsened by an inordinately strong dollar. While FPI flows were still negative at $35 billion since October, 2021; the real worry was the CAD. Trade deficit for June at $25.63 billion, raised fears of a spik in current account deficit. With weak forward premia in the dollar forward market the tone was set for a sharp fall in the rupee.