Rupee Slides to 88.75 Against Dollar on H-1B Hike, Foreign Outflows
As foreign cash withdrawals increased following a sharp increase in US H-1B visa costs, the rupee dropped 47 paise to its lowest point ever, 88.75 versus the US dollar.
Tuesday saw a persistent outflow of foreign capital due to a sharp increase in the US H-1B visa cost, which is projected to significantly hurt Indian IT services exports. As a result, the rupee fell 47 paise to reach an all-time low of 88.75 (provisional) versus the US dollar.
As market players examined the potential effects of the new USD 100,000 H-1B visa charge, which might cause a halt in remittance growth and limit service exports to the US, forex dealers said that the rupee declined to record low levels. Additionally, they stated that the rupee may be under pressure due to risk aversion in local markets.
At 88.41, the currency opens weak and continues to decline.
The rupee started the day at 88.41 on the interbank foreign exchange, lost more ground, and hit an all-time intraday low of 88.82 versus the US dollar before closing the day at 88.75 (provisional), down 47 paise from its previous close.
“We expect the rupee to remain weak as the US visa fee hike issue may continue to dampen domestic market sentiments and may result in foreign outflows. However, overall weakness in global crude oil prices may support the domestic currency,” said Anuj Choudhary, Research Analyst, Currency and Commodities, Mirae Asset ShareKhan.
Choudhary further noted that any intervention by the Reserve Bank of India (RBI) may support the rupee at lower levels.
“Traders may take cues from PMI and current account balance data from the US. Traders may also take cues from US President Donald Trump and Fed Chair Jerome Powell’s speech,” Choudhary said, adding that USD-INR spot price is expected to trade in a range of 88.45 to 89.20.
At 97.28, the dollar index, which measures the strength of the US dollar relative to a basket of six other currencies, was down 0.06 percent. In futures trading, Brent crude, the world’s benchmark for oil, was up 0.41 percent at USD 66.84 a barrel.
FIIs withdraw more than Rs 2,900 crore from stocks.
Regarding the local equities market, the Nifty down 32.85 points to 25,169.50, while the Sensex fell 57.87 points to close at 82,102.10. According to exchange statistics, foreign institutional investors sold off stocks on Monday for a total of Rs 2,910.09 crore.
Headwinds like the increased US tariffs on Indian exports, according to forex dealers, affected market mood. Piyush Goyal, the minister of commerce and industry, is leading a formal mission to the United States for trade negotiations.
In order to forward discussions and reach an early completion of a mutually beneficial trade deal, the delegation intends to meet with the US team. The minister will visit New York, accompanied by the special secretary in the ministry, Rajesh Agrawal, and other officials.
Read Also: Why a Wage-Based H-1B Visa Lottery Could Harm Entry-Level Indian Workers
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