The Indian rupee ended this year’s last trading day on Friday as Asia’s worst-performing currency, Reuters reported.
The currency declined by 11.3% as compared to the end of last year – its worst annual performance since 2013 as the United States dollar gained because of the Federal Reserve’s aggressive monetary policy tightening to stem inflation.
The rupee touched a record low of 83.29 against the dollar in October and has been hovering below the psychological mark of 83 in recent weeks.
On Friday, the rupee rose 15 paise to provisionally end at 82.72 against the US dollar, down from 74.33 at the end of last year. The dollar, meanwhile, was on track for its biggest annual gain since 2015, according to Reuters.
Data from the Reserve Bank of India on Thursday showed that India’s current account deficit widened to an all-time high in the July-September quarter on the back of high commodity prices and a weak rupee. The deficit occurs when the value of the goods and services that a country imports exceeds the value of the products it exports.
The impact of Russia’s invasion of Ukraine also made matters worse and weighed on the rupee.
Traders and analysts have predicted that the rupee would trade in the 81.50 to 83.50 range in the first quarter of 2023, Reuters reported. But they also cautioned that a possible recession in global economies, coupled with the geopolitical scenario, has made gauging the direction of the markets difficult.
“Even if the rupee appreciates, it could still underperform Asian peers and would not be a top pick in the emerging market complex,” Christopher Wong, foreign exchange market strategist at OCBC Bank, told Reuters.
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