Rupee Strikes To Lifetime Low of 69 Against US Dollar

Rupee Strikes To Lifetime Low of 69 Against US Dollar

The rupee had touched its previous record low of 68.8650 per dollar on November 24, 2016.

New Delhi: Indian National Rupee fell to an all-time low against the US dollar on Thursday tracking Asian peers, with weakening macro-economic fundamentals on the domestic front also weighing on the currency. The dollar's sharp gain overnight coupled with falls in Asian peers caused the drop in early trade, traders said, adding they were hopeful the central bank would step in to prevent further losses. The rupee was trading at 68.92/93 to the dollar at 11.12 am, after hitting a life low of 69.0950 earlier in the session, and sharply lower than its previous close of 68.65/66. 

The rupee's previous record low was 68.8650 per dollar, hit on November 24, 2016.The dollar was, however, steady against its peers on Thursday, having failed to extend overnight gains amid conflicting signals from Washington on a proposal to restrict Chinese investment as the bitter U.S.-China trade row kept financial markets on edge.

On the domestic front, a widening current account deficit (CAD) due to higher global crude oil prices and steady capital outflows have weighed on the rupee this year.

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"Weakening at this pace shatters confidence. Markets expect RBI (Reserve bank of India) to manage the currency more effectively. The pressure on INR is high, thus in the absence of major action from regulators, 70 levels can be seen," the head of currency and debt trading at a foreign bank said. "The RBI has been effectively managing (the rupee) over the years, and they do have ample firepower to manage sharp falls."

Foreign exchange reserves stood at $410.07 billion as of June 15, latest Reserve Bank of India data showed.

Oil prices have been rallying for much of 2018 on tightening market conditions due to record demand and voluntary supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC).

Economy's March quarter CAD widened to $13.0 billion, or 1.9 per cent of GDP, from $2.6 billion, or 0.4 per cent of GDP, from a year earlier. Despite the rise in CAD, it remains modest relative to GDP and is largely financed by equity inflows, including foreign direct investment (FDI), Moody's said in a note on Thursday, adding that the large foreign exchange reserves provided a good buffer.

"India's low dependence on foreign-currency borrowing to fund its debt burden limits the risk of currency depreciation transmitting into materially weaker debt affordability," Moody's added.

(Inputs from news agencies)

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