Why experts believe rupee could weaken further to hit 79 against US dollar

The rupee, on Monday, touched an all-time low of 77.42 against the US dollar in early trade, weighed down by the strength of the American currency in the overseas market and unabated foreign fund outflows.

Sinha is not surprised with the weakening of the Indian rupee. She explained that rupee could depreciate further in the absence of RBI support.

She said, "We are not surprised by this INR weakness and we see more room for this move to continue. The rupee still is on the stronger side of historical averages on a relative basis and has at least another 1 to 2 percent to depreciate easily if RBI does not come in strongly to support the rupee."

Meanwhile, Jayesh Mehta, MD and Country Treasurer of Bank of America, said that he doesn’t see any factors dramatically changing for the rupee. He pointed out that all emerging market currencies are currently depreciating.

Mehta said, "All the factors right now, and we don't see any of that changing dramatically. Six months back, we had robust flow, even though FPI stopped in October, but we had FDI coming in, and we didn't have crude at the level which we are seeing today and we don't know the uncertainty there. All the other emerging market currencies are depreciating. In fact, today, unlike other developed markets, it is more on the emerging market in last two days, which has been impacted more. So I think, we will continue to see that till the tide changes; and it doesn't look like anything is changing immediately."

Mehta stressed on the need to watch factors such as oil prices, gold imports to gauge if current account deficit could come under pressure.