By Aditya Raghunath
Investing.com -- A Bloomberg report said that the rupee is Asia’s worst-performing currency in April from one of the best performers in the previous quarter. It might fall further thanks to the “unwinding of short dollar positions against the rupee, which ICICI Bank (NS:ICBK) estimates has grown to $50 billion,” the report added.
Why has the Rupee Fallen?
There are three main reasons for the rupee’s fall. One is the rising number of COVID-19 cases. India recorded over 2 lakh cases on April 14 and has been averaging 1.63 lakh cases for the last seven days. As more states start implementing lockdown measures in the country, experts say that the economic recovery will be delayed.
At the same time, the US economy is recovering faster than expected which is causing FIIs (foreign institutional investors) to sell India and that is hurting the rupee further.
The third reason for the fall is the RBI’s decision to maintain low interest rates which has increased liquidity in Indian markets and have put further pressure on the rupee. The government will borrow more and the RBI will support it.
How Much Will it Fall More?
The Bloomberg report says that Federal Bank (NS:FED) expects it to fall to Rs 76 by year-end. Other market participants say that the rupee can fall to Rs 77-78 levels as well.