Rupee hits 71-mark for first time ever

Drops 26 paise against US dollar

The rupee Friday plunged to a lifetime low of 71-mark against a dollar on surging crude oil prices stoking inflation fears and a strong demand for the dollar among oil traders.

The Indian currency fell 26 paise to a US dollar just ahead of the expected release of the economic growth data by the government later in the day. However, analysts said the rupee fall was not correlated to India’s macro-economic condition but a follow up of global developments including the weakening of Turkish Lira and Argentinian Peso. Turkish Lira fell by over 5% on Thursday on the news of the resignation of the deputy central bank governor.

Since the rupee fall is in line with its Asian peers, the Reserve Bank of India is not seen intervening into the market. Traders said if the plunge is on-off, the central bank may come for the rupee rescue. They, however, did not expect any major intervention.

The continuous fall in the rupee has come as a rude shock for importers who, according to analysts are rushing for longer maturity cover for overseas payments. Rupee has so far plunged to nearly 11% against the dollar this year but the government has expressed the hope that it would stabilize soon.

Economic Affairs Secretary Subhash Chandra Garg had said earlier this week that he expected the rupee to stabilize in the 68-70 band as foreign portfolio had once again turned net investors in the Indian market.