Undoubtedly, the rupee has been the biggest newsmaker of the week much to the dismay of economists and importers. On Tuesday, the rupee hit a record low of 58.96 against the US dollar, due to persistent dollar demand from banks and importers and heavy capital outflows. However, it later recovered after the Reserve Bank India’s intervention in the forex market. The rupee still closed 24 paise lower at 58.39 compared to Monday’s close, extending losses for fifth straight day.
The value of rupee fell more than 200 per cent since 1990 and according to analysts as long as the current account is in deficit, rupee will continue to fall further.
Experts also pointed out that FIIs last week sold debt securities worth `7,600 crore as weakness in rupee is instrumental in the FIIs exiting the debt markets.
The benchmark S&P BSE Sensex too slumped by 298 points, while FIIs sold shares worth `885 crore, as per provisional data with stock exchanges.
A weakening rupee can stoke inflation and make the country’s import bill heavier. Currently, gold and oil imports account for over 11 and 35 per cent of the country’s total import bill respectively.
