Amid fuel price hike, rupee hits lifetime low of 72.67 against US Dollar

Forex dealers said besides strong demand for the American currency, buying by importers, mainly oil refiners in view of surging crude oil prices and capital outflows, weighed on the domestic currency.

Published: 10th September 2018 09:25 AM  |   Last Updated: 11th September 2018 02:59 AM   |  A+A-

For representational purposes (Express Illustration)

By Express News Service

MUMBAI: The rupee once again got clocked, hitting another historic low of 72.67 per one US dollar.
Monday’s downward slide was due to two reasons. One, dollar reigned supreme, supported by better US jobs data and anticipated Federal Reserve’s rate hike this month. Two, India’s external position was whipsawed by bulging trade and current account deficit, raising concerns of a worsening balance of payments amid the emerging market rout.

Rupee opened at 72.11, tumbled as much as 1.3 per cent to touch a fresh low of 72.67 and eventually closed day at 72.46 per dollar, 1 per cent down from its previous close of 71.74.US President Donald Trump threatened to whack another $267 billion worth tariffs on China, leading to a fresh sell-off by Chinese stocks that pulled Asian and emerging-market equities to 14-month lows.

Both benchmark indices Sensex 30 and Nifty 50 fell over 1 per cent to their lowest close in nearly four weeks, while Sensex fell 467.65 points to 37,922.17, making Monday’s share slam the biggest in six months. The 10-year government bond yields jumped 13 bps to settle at 8.158 per cent – last seen on November 24, 2014.

ALSO READ | PM Narendra Modi must break his silence on rising fuel prices, falling rupee: Congress

“The Indian rupee has now weakened around 13 per cent since the beginning of 2018,” said Annalisa DiChiara, Moody’s vice-president and a senior credit officer, Moody’s Investor Services adding that the rupee weakness was credit negative for companies that generate revenue in rupees but rely on dollar debt for funding.

Worst is yet to come, as CAD, which already widened to a 5-year-high of 2.4 per cent of GDP (up from 1.9 per cent) during the June quarter, is heading one way – upwards. That’s because, volatile global crude prices and weakening rupee are likely to make the country’s oil import bill dearer. In July, it already surged 76 per cent to $10.2 billion. On its part, the government appears to be worried and is believed to have knocked on RBI’s doors urging intervention, besides sending feelers about introducing a deposit scheme for overseas Indians and efforts to boost FDI and foreign inflows.

ALSO READ | Depreciating Rupee attracting NRI investors

 “We expect the rupee to remain under pressure on an intensifying of the emerging markets crisis and fear of a contagion,” said Kotak Institutional Equities in a note. It expects currency to range 69-74 for the rest of 2018-19. Till date, rupee weakened 13 per cent, yet the central bank’s intervention in the forex market remained piecemeal. Further erosion will dampen investor sentiment, despite India’s world-beating economic growth story.

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  • Rajendra Panchbudhe

    Govt. doesn't show any commitments whether or not it wants to come out clean ..seems to experiment how it can fool people of India.
    13 days ago reply