Rupee hits new low of ` 70.74

Rupee slumped to a fresh all- time low on Thursday amidst weakness in emerging market currencies as surge in global crude oil prices renewed concern regarding India’s current account deficit.

The rupee hit a record low of 70.86 a dollar in the intra- day trade before closing the day at 70.74 a dollar, down 0.20 per cent from its previous sessions close of 70.59.

Oil prices soared higher following reports about fall in US inventory level and likely disruption in supply from Iran and Venezuela.

According to a report released by Kotak Institutional Equities, a $ 10 per barrel change in crude oil prices results in 50 basis point impact on current account deficit and GDP and 30 basis point impact on domestic inflation. It added that India’s macro position would worsen if oil prices were to shoot above $ 80 per barrel.

“Rupee needs more support from RBI or some big global positive news. There is a lot of panic buying amongst importers and equity investors as well, who want to hedge the currency risk now. Our macros remain robust but panic is the key factor behind current volatility. Everyone is a buyer of dollars in current market,” said Sajal Gupta, head forex and rates, Edelweiss Securities.

After hitting the intraday low against the dollar, India Forex advisors said rupee managed to recover some of its losses after suspected intervention by RBI. “Most of the emerging market currencies weakened against the dollar, Lira was seen extending the fall, down by more than 5 per cent, the South African rand was trading lower by more than 1.9 per cent whereas Indonesian rupiah was trading lower by 0.64 per cent,” it said.