Rupee has extended its downward momentum on Wednesday, falling 9 paise to hit its lowest level of 90.05 against US dollar in early trade. This comes after the currency had already recorded a dip of 42 paise to close at 89.95 against the US dollar, on Tuesday.According to VK Vijayakumar, chief investment strategist at Geojit Investments Limited, the trend might reverse once the India-US deal is sealed.“The rupee depreciation will halt and even reverse when the India-US trade deal materialises. This is likely this month. A lot, however, will depend on the details of the tariffs to be imposed on India as part of the deal.”“A real concern now, which has contributed to the slow drifting down of the market, is the continued depreciation in the rupee and fears of further depreciation since the RBI is not intervening to support the rupee. This concern is forcing the FIIs to sell despite the improving fundamentals of rising corporate earnings and strong rebound in GDP growth,” the analyst further added.This fall was primarily driven by speculators covering their short positions and importers consistently buying dollars. Market experts pointed to a combination of external and domestic factors for the sharp fall, including the strength of the US dollar and the continued delay in the first tranche of the India-US BTA (trade deal).
