Central bank intervenes as rupee hits record low against dollar
MUMBAI: The Indian rupee fell to a record low of 68.86 yesterday, pressured by a rallying US dollar, capital outflows from emerging markets, and worries about the country’s demonetisation drive.
Despite repeated interventions by the central bank to slow the slide, the rupee breached its previous low of 68.85 to the dollar set in August 2013, when the country was mired in its worst currency crisis in more than two decades.
The Reserve Bank of India (RBI) intervened again in the afternoon, after spending around US$500 million (RM2.23 billion) in the morning, but the rupee was able to claw back only a fraction of its losses. It was trading at 68.82 as of 0826 GMT (4.26pm Malaysian time), down about 0.4% on the day.
The rupee has fallen around 3% so far this month, its biggest fall against the dollar since August 2015, though it has fared better than many other emerging market currencies since Donald Trump’s shock win in the US presidential election.
Analyst said they expected the rupee to remain under pressure, with the RBI continuing to intervene to smoothen volatility but without defending a specific level. – Reuters