Elevated commodity prices to keep pressure on rupee

New Delhi, March 19 (IANS) The Indian rupee is expected to remain under pressure exerted by high commodity prices.

On Friday, the rupee closed at 75.80 to a greenback.

Lately, high commodity prices, as well as outflow of foreign funds from equity markets have weakened the Indian rupee against the US dollar.

The rising prices of crude oil, along with other commodities triggered by the Russia-Ukraine war has kept pressure on the rupee.

The rupee has has remained in a range of 75.50-77 level, since the start of the conflict.

“With elevated crude oil and commodity prices, and its consequent impact on the current account balance, the pressure on the rupee is expected to persist,” ratings agency Crisil said.

“The global uncertainty caused by the Russia-Ukraine conflict is adding to the risk-off sentiment. Fed rate hikes causing capital outflows only exacerbates the impact.”

However, the agency cited that depreciation in the rupee, is likely to be relatively less compared with the 2013 taper tantrum episode, as India’s external account situation is more comfortable in terms of short term external debt and import cover.

“Adequacy of foreign exchange reserves is also acting as a shield.”

Besides, the expected inflow of funds during the mega initial public offer of the Life Insurance Corporation of India and the inclusion of India’s debt in the global bond index towards the later part of fiscal 2023 are expected to provide some support to the currency.

“Net-net, we expect the rupee to depreciate to 77.5 to a USD in March 2023, compared with an estimated 76.5 to a USD in March 2022.”