The Indian Rupee rose against the U.S. dollar in early trade Wednesday, after plunging to an all-time low a day earlier.
At the interbank foreign exchange, the rupee opened at 79.29 against the dollar. In initial trade, the local currency witnessed a high of 79.24 and a low of 79.31. The rupee-dollar exchange rate stood at 79.33 on Tuesday.
According to Sriram Iyer, senior research analyst at Reliance Securities, the rupee opened higher tracking an overnight fall in crude oil prices.
The dollar index, which gauges the greenback’s strength against a basket of six currencies, slipped 0.08% to 106.45. Brent crude futures rose 1.14% to $103.94 per barrel.
“However, appreciation bias could remain capped and possibly the rupee could witness new lows against the dollar weighed down by fears of economic slowdown and worsening current account deficit,” he said. “In fact, many traders and investors are forecasting a CAD upwards of 3% of GDP in the ongoing financial year, up from 1.2% last year.”
The only thing which could arrest the rupee’s fall could be a hawkish Reserve Bank of India in their upcoming meeting in August, Iyer said.