RUPEE PLUNGES TO ALLTIME LOW AGAINST DOLLAR
The Indian rupee slumped to an all-time low against the US dollar on Thursday as the currency comes under increasing pressure from rising oil prices. The rupee, Asia’s worst performing currency according to Bloomberg News, fell to 69.10 against the greenback in early trade before recovering slightly to 68.93 later. India is a massive importer of oil, securing more than two-thirds of its needs from abroad. A surge in oil prices over the past year to around $78 a barrel has meant more rupees are needed to purchase crude.
Continuing its free fall for the fourth straight session, the Indian rupee on Thursday hit a record closing low of 68.79, showing a fall of 18 paise against the US dollar due to multiple headwinds like weak global cues and concerns related to inflation and fiscal slippage.
The domestic currency’s previous all-time closing low was 68.73, touched on November 24, 2016. The beleaguered Indian rupee crashed to breach the key psychological level of 69 in the morning trade and slipped further to hit a life-time low of 69.10, a fall of 49 paise during the volatile session today.
“Weak global cues and rising oil price continued to impact domestic market sentiment while rupee declined to all time low amid concern on inflation and current account deficit... Any intervention from RBI to contain the volatility in rupee and progressing monsoon will provide some respite to domestic market in the near term,” Vinod Nair, head of research, Geojit Financial Services Ltd, said.
Mad rush for dollar was witnessed as importers see further erosion in the rupee value even as it was a field day for speculative traders before the RBI came in strongly, pumping million into the market to salvage the rupee.
The rupee swung between 69.10 and 68.72 most part of the day at the interbank foreign exchange (forex) market after a gap-down opening at 68.89.
The macroeconomic picture of India appears to be caught in a recurring instability against the backdrop of surging global crude prices and consistent widening in the trade deficit as well as increased pressure from capital outflows, all these leading to largely forex market turmoil.
The RBI, meanwhile, fixed the reference rate for the dollar at 68.9389 and for the euro at 79.6382. Globally, the dollar was trading near eleven-month high against a basket of the other major currencies. The dollar index, which measures the greenback’s value against basket of six major currencies, was up at 95.05. In the cross currency trade, the home currency edged lower against the euro and finished at 79.71 as compared to 79.70, but held steady against the Japanese yen at 62.41 per 100 yens earlier.