The rupee fell to a fresh record low in opening trade today. The currency fell 42 paise to hit a fresh all time low of 70.32 intra day.
The Indian currency has been under the pressure in the past few sessions due to big meltdown in the Turkish lira Currency experts believe that 70 to a dollar may not be the bottom and the rupee could weaken further in the coming days.
Arun Thukral, MD & CEO of Axis Securities said-
“The recent fall in INR is owing to the Turkish financial crisis along with the strengthening USD. The Turkish lira crisis is weighing heavily on emerging market economies, especially those with large current account deficits. India’s weakening current account is an issue led by volatile oil prices. Also, growth in the US economy has led to the fall of INR owing to a strong USD. With two more rate hikes expected in the US in 2018 and the RBI likely to maintain status quo in the near term, we believe that in the current scenario pressure on INR may continue over the coming few months.”
Here are 10 things to know about Indian rupee’s movement today:-
1. According to forex dealers, besides strong demand for the American currency from importers, capital outflows mainly weighed on the domestic currency.
2. A sharp surge in trade deficit too impacted the Indian rupee today. Trade deficit soared to a near five-year high of $18 billion, data released by the commerce ministry on Tuesday showed.
3. Depreciation of the Turkish lira against the dollar after the US imposed tariffs on steel and aluminium imports also put pressure on the Indian rupee today.
4. The Indian currency has lost 10.5 per cent of its value this year so far against the backdrop of country’s ballooning fiscal deficit and surging crude prices and mounting worries surrounding the US-China trade conflicts.
5. The rupee has been one of the worst performing currencies among peers this year – raising fears of a repeat of the currency crisis of 2013.
6. Officials said that country’s crude oil import bill is likely to jump by about $26 billion in 2018-19 due to the rupee’s fall, which could fan inflation worries.
7. Finance Minister Arun Jaitley on Wednesday said that foreign exchange reserves are comfortable by global standards and sufficient to mitigate any undue volatility in the foreign exchange market.
8. Meanwhile, foreign institutional investors (FIIs) sold shares worth a net of Rs. 378.84 crore on Tuesday, as per provisional data.
9. Domestic stock marketsclosed Thursday’s session on a negative note. The S&P BSE Sensex tanked 188.44 points, or 0.50 per cent, to end at 37,663.56. The NSE’s Nifty50 index tripped 50.05 points or 0.44 per cent to settle at 11,385.05.
10. “I am not too concerned about rupee hitting an all-time low”: Raghuram Rajan
The former RBI governor Raghuram Rajan, in an interaction with CNBC, said that he was not too concerned about the domestic currency as “it is more a factor of dollar strength rather than necessarily rupee weakness”
The rupee has been strengthening in real terms for some time now, while inflation rate has been modest but above world inflation rates. As a result, the rupee needs modest weakening over time. Hence, I am not too concerned about the rupee hitting an all-time low,” Rajan said.
Source- NDTV, News18, The Hindu, Business Today
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