Cen­tral bank in­ter­venes as ru­pee hits record low against dol­lar

The Sun (Malaysia) - - SUNBIZ -

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

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