Indian rupee may sink further to 73 per dollar
dubai — The Indian rupee continued its relentless tailspin on Thursday to hit a new record low of 72.12 to the dollar, or 19.64 per dirham, as emerging market currencies suffered more losses.
The embattled currency of Asia’s third-largest economy slid to 72.12 to the greenback in afternoon trade. It has steadily fallen by about 10 per cent throughout 2018, after starting the year at 63.67.
Adeeb Ahamed, managing director of Lulu Financial Group, said along with other major currencies that have lost considerably against the dollar, the Indian rupee is tracking the global cues. “With world matters unlikely to see any concrete solutions soon, we believe that the rupee could weaken a bit more against the dollar,” he said.
“With the rupee having reached our year-end forecast of 71.5, the question is how much lower it can go,” head of research Khoon Goh and strategist Rini Sen wrote in a note on Wednesday. “The currency is still on the expensive side” and current fair value is around 73 per dollar [19.89 per dirham], which suggests it will weaken further, they said.
“International crude oil price has been steadily increasing this past three to four months, which adds to short term fiscal pressure. With India importing a large swathe of its fuel needs, rising oil prices will naturally lead to a higher dollar bill which, in turn, will naturally weaken the rupee,” said Ahamed.
He said the dollar has strengthened on account of an improving American economy. Meanwhile, closer to Asia, the Turkish lira’s value has been vastly affected, which is in turn taking a toll on emerging market currencies. “The ensuing confrontation by the East and West on trade matters is also not helping the cause of other currencies worldwide.”
Last month, the rupee crossed 70 for the first time as India was buffeted by the turbulence of the Turkish financial crisis.
India’s currency had its worst month in three years in August as crude rallied on speculation sanctions on Iran will shrink global supplies.