RUPEE FALLS FURTHER TO 70.74 AGAINST $

The rupee once again fell on Thursday, prompted by sustained dollar demand from oil importers, and possibly defence-related purchases. A possibility of US sanctions on India, if it buys Russian air defence system, also weighed on the sentiments, said currency dealers. The currency fell to its intra-day low of 70.86adollar, but closed at 70.74, asthe RBI sold dollars in the market to cool the exchangerate. So far this year, the rupee has fallen 9.7 percent, making it the worst performing currency in Asia.

The rupee slipped further to yet another record low, prompted by sustained dollar demand by oil importers, and possibly defence-related purchases.

A possible US sanction on India, if it goes ahead with buying Russian air defence system, also weighed on the sentiments, currency dealers said.

The partially convertible currency fell to its intraday low of 70.86 a dollar, but closed at 70.74 a dollar, as the central bank sold dollars in the market to cool the exchange rate off.

So far this year, the rupee has fallen 9.7 per cent, making it the worst performing currency in Asia. The rupee’s loss against the dollar in the last few days comes in the backdrop of weakness in emerging market currencies, particularly the Turkish lira, which fell more than 5 per cent. The South African rand and the Indonesian rupiah also fell sharply. However, the US dollar has largely kept steady against major global currencies, and in the past few days, has lost against major currencies on some days.

The dollar index, which measures the greenback’s strength against major global currencies, was trading at 94.583, down 0.02 per cent from its previous close.

One major reason for the rupee’s loss, however, is the continued rise of crude oil prices. Crude oil prices rose as supply shrank after the Iran sanctions. Brent crude touched

$77.64 a barrel on Thursday.

“Oil prices are not coming down, and it will need a strong good news on the oil front to get a handle on the exchange rate now,” said a senior trader with a foreign bank.

Even as portfolio flows turned negative year-to-date, in August, the flows have been positive, but only marginally.