MUMBAI: Wall Street’s Wednesday rout, sparking an equities sell-off, led the rupee touch a fresh low of 74.46 per dollar on Thursday, though the domestic unit rebounded from its fresh all-time low.
Prompted by global cues, rupee opened at 74.31 and touched a low of 74.46, but closed the day at 74.22.
The rupee’s depreciation is continuing unabated even as both government and the RBI stepped in momentarily to stem the slide.
While the government raised import duties on certain export items, RBI put in measures to raise overseas capital, besides easing norms for foreign investment in local bonds. Widening CAD left the rupee vulnerable amid surging oil prices, trade tensions and rising US interest rates. So far this year, rupee lost nearly 14 per cent and is seen sliding to 75 per dollar by year-end as per estimates.
According to the World Bank, an orderly rupee depreciation would increase competitiveness and relieve some of the pressures in the capital market. It sees the weakening rupee as a positive development provided ‘it’s done in the right way.’
On Thursday, the 10-year gilt yield stood at 8.01 per cent from its previous close of 8.031 per cent, while the dollar index, which measures the US currency’s strength against other currencies, traded 0.29 per cent lower at 95.235.
As per latest data, RBI remained net seller of dollars in August, selling $2.323 billion in the spot market. In all, it purchased $3.680 billion, but sold $6.003 billion, according to the data.
In the past, the central bank sold $1.87 billion July, $6.184 billion in June, $5.767 billion May and $2.483 billion in April. In August 2017, the apex bank was net buyer of the US currency, after purchasing $4.556 billion, and selling $1.330 billion in the spot market. RBI maintains that its intervention in the exchange market is to curb volatility in the rupee and not to target a level of the domestic currency.
Meanwhile, International Monetary Fund on Wednesday had warned emerging economies should take steps to insulate themselves from an exodus of funds, and boost their foreign currency reserves.