India Rupee depreciated past the low of 50.50 per US dollar today, to a 32 month trough of 50.60 levels on the back of strong dollar demand from banks and importers and reemergence of the American currency as a safe-haven global asset.
Furthermore, the declining trend in FDI investments, outflow of hot FII money on account of global turbulence, worsening trade deficit and slowed momentum of domestic growth has kept the value of Indian rupee subdued with a bearish outlook.
Forex analysts are already betting on the crucial 51 mark to be soon crossed over, given that India is a net oil importing country. Further, the government is also planning to cut fuel prices by Rs.2/litre, after the recent hike in petrol prices administered by oil marketing companies, ahead of the key political even in form of Parliament winter session.
This is further likely to add to India’s woes of fiscal deficit on account of rising subsidy burden on the exchequer. Consequently, this will further add pressure on the value of Indian Rupee to go past psychological 51-mark in near future.