Amid the fall in the rupee, Zerodha co-founder Nikhil Kamath on Thursday said the 82 level for the domestic currency is not “such a bad thing”. He also shared an infographic comparing the fall in the Indian rupee with that in Japanese yen, euro, Australian dollar, Pound Sterling, and Swiss Franc.
“Rupee at 82 isn’t such a bad thing….US is too far anyway, for all else but dollar-denominated commodities… If this trend continues, large companies might have to relocate out of the US to remain competitive,” Kamath said in a tweet.
The rupee has declined about 10 per cent in the current calendar year. The currency, however, on Thursday appreciated 35 paise to 81.58 against the US dollar in the early trade as the American currency retreated from its elevated levels.
Kamath shared data on the decline in various currencies between September 28, 2021, and September 28, 2022. According to the data, Japanese yen declined 29.77 per cent during the period, Pound Sterling fell 24.88 per cent, and Swiss Franc slipped 5.12 per cent. The Indian rupee declined about 10.01 per cent, Euro dropped 19.65 per cent and Australia was down 11.55 per cent.
The rupee has been witnessing a decline since the start of this year mainly due to the strengthening of the American currency, risk-averse sentiment among investors and escalation of geopolitical risks due to conflict in Ukraine.
The major reason for falling the rupee in the past few months was the continuous outflow of dollars due to the exit of foreign portfolio investors (FPIs). Between October 2021 till June 2022, FPIs sold Rs 2.46 lakh crore in the Indian equity markets.
The RBI’s Monetary Policy Committee (MPC) is going to announce its decision on interest rates on Friday (September 30). Analysts expect another 50-basis-point hike on Friday to control inflation, which saw an uptick in August and stood above at 7 per cent, above the RBI’s 6 per cent upper target.
In the past three monetary policy reviews since May this year, the RBI’s rate-setting panel has raised 140 basis points in total. Currently, the repo rate, the interest rate at which the RBI lends to the commercial bank, stands at 5.40 per cent.
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