Free-falling rupee breaches 70 mark

Dollar gained strength amid fear of an economic crisis in Turkey

On Monday, the rupee ended 110 paise lower at 69.93. (Reuters file pic)
Highlights: 
Rupee depreciated to 70.09 in the early morning trade
Slide triggered as foreign investors pull out of Indian markets amid economic crisis in Turkey

In a first, the value of rupee against the US dollar depreciated below the 70 mark on Tuesday, touching a historic all-time low.

In the early morning trade, the value of the rupee depreciated by 16 paise to 70.09 as the dollar gained rapid strength amid fear of an economic crisis in Turkey, that has led to the fall in the Turkish lira.

However later on, rupee stabilised to an extent, and has been trading at sub-70 mark. With this, the currency has depreciated around 10.1% in 2018 so far, from Rs 65.86, on January 1, 2018. 

The rupee had opened marginally higher at 69.85 against the greenback on Tuesday morning.

Also read: Rupee fall: govt says no need to worry

Prior to this, on Monday, the rupee ended 110 paise lower at 69.93 on against the Friday close of 68.83, which was a biggest single-session decline against the dollar since September 3, 2013.

The Turkish lira dived almost 8% on Monday to a low of 7.24 against the US dollar, fuelling fears that it may impact financial institutions in Europe. Later, it recovered some ground after the finance ministry assured steps to rein in the crisis.

The analysts suggest that rupee might further depreciate below 71 mark, as most emerging market currencies are impacted because of the strengthening of the dollar. Foreign investors have sold $6.8 million and $5.15 billion in equity and debt markets so far this year, respectively, triggering the slide in the rupee..

On Monday alone, foreign institutional investors and foreign portfolio investors bought shares worth Rs 3,417.54 crore in Indian markets, while selling shares worth Rs 4,389.4 crore, leading to net outflow of Rs 971.86 crore, as per the data available with BSE. This, inturn, has increased the demand for dollar viz-a-viz rupee.

During the month of July, as well, markets saw a net outflow of FDIs and FIIs worth Rs 1,436.95 crore.

“The dollar is expected to remain strong in the near term,” Rahul Shah, Vice-president -Equity Advisory Group, Motilal Oswal Securities said.

With this, the fear of an increase in prices of consumer goods looms large over the country.

Dhanraj Bhagat, partner at Grant Thornton India, said: “The slide in the rupee will naturally make imports costlier, so we are expecting that to happen soon. Also if the rupee crosses the 70 mark, there is an apprehension that it may depreciate further. So, in that case, the impact would be all the more.”

When contacted, the Reserve Bank of India (RBI) declined to comment on the issue.

However, heads of various banks confessed to DH, that they haven't got any specific directive from the apex bank to control the slide of the rupee.

Liked the story?

  • 0

    Happy
  • 0

    Amused
  • 3

    Sad
  • 2

    Frustrated
  • 1

    Angry

Comments:

Free-falling rupee breaches 70 mark

0 comments

Write the first review for this !