Rupee touches all time low


Mumbai: The rupee has slipped to an all-time low, declining to Rs 68.86 against the US dollar in intra-day trade before recovering to end the session at 68.7475 on Thursday. Experts fear it may hit the dreaded 70 mark despite RBI intervention.

The major reason behind rupee losing value is due to the foreign investors selling both their stocks and bonds in the Indian market during the month. So far they have offloaded stocks worth $1.9 billion and bonds valued at $2 billion. Even after losing 2.9 percent in the month, Indian currency has outperformed most currencies while the US dollar has seen a strong rise against most global currencies. The last reading of the real effective exchange rate of the rupee against a basket of 36 currencies was 115 points. But the rate has now come down to range between 110-112. Forex expert AW Rajwade has noted that the drop of rupee value needs to fall much more to restore competitiveness, as trade deficit is still $140-150 billion despite the sharp fall in oil prices.

While other economists are with the view that the immediate target for the rupee would be 69 per dollar in the absence of aggressive intervention by the RBI. The Bloomberg Dollar Spot Index which tracks the currency against 10 major peers, held gains after rising 0.6 percent on Wednesday. It reached the strongest level since 2005. Bloomberg reported HDFC Bank, the top rupee forecaster based on Bloomberg’s quarterly rankings that it does not see the losses sustaining and predicts a recovery to 68.50 by the year end.

With the concern that US president-elect Donald Trump will take a more protectionist approach to trade has also weighed on developing-nation assets.

With decline in Indian currency at 2.9 percent in November, Malaysia’s Ringgit at a loss of six percent, Indonesia’s rupiah at a drop of 3.8 percent, Taiwan’s dollar at a fall of 1.1 percent while China’s Yuan weakens at 2.1 percent.

Leave A Reply

Your email address will not be published.