Published: Sat, June 30, 2018
Markets | By Noel Gibbs

Rupee sinks to record low vs US dollar

Rupee sinks to record low vs US dollar

The partially convertible rupee was trading at 68.93/94 to the dollar at 0802 GMT, after hitting a life low of 69.0950 earlier in the session, and sharply lower than its previous close of 68.65/66.

RBI sold dollars in futures market: While the demand for dollars has been ever-increasing, RBI has taken the futures market route as per a leading business daily report to tame the fall of Indian rupee against the dollar.

The rupee's fall to a lifetime low of 69.09 to a dollar on Thursday was not unexpected, as argued in this column previously.

During 2017-18, the exports grew by about 10 per cent to United States dollars 303 billion.

Asia's third-largest economy is battling inflation and a widening current account deficit stoked by high oil prices.

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Higher opening of the domestic equity market also propped up the rupee, they added.

Garg said other tools were also available to stem the decline in the rupee.

Overseas investors have reduced holdings of rupee-denominated government and corporate bonds by $6.1 billion, and pulled $785 million from equities since the beginning of 2018.

The rupee has shed 7.7 percent so far this year at its record low, making it the worst performing currency in Asia, followed closely by the Philippine peso. Economists from DBS Bank and Barclays expect it to breach the 70 to a dollar mark.

It is not only India, which is feeling the heat of the weakness of the currency.

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Concerns over supply disruptions in Libya and Canada also pushed prices higher. Current Account Deficit and net Foreign Investment becoming adverse are said to be the culprits.

"Our view on broad EM is still one of caution, something we have been advocating for some time", said Dushyant Padmanabhan, a currency strategist at Nomura in Singapore. This triggered a sharp upward reversal in the oil prices. "Uncertainty on all these fronts could persist for some time".

Concerns have been mounting over the U.S. threats to sanction countries, including India, that do not stop importing oil from Iran by November 4. Shanghai Composite Index too was up 0.20 per cent.

India's foreign exchange reserves stood at $410.07 billion as of June 15, the latest central bank data showed.

Selling of dollars by banks and exporters on Friday made the greenback weak against some currencies overseas, which supported the rupee, forex dealers said.

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A central bank spokesperson wasn't immediately available for comment on the rupee's move.

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