Rupee Continues to Plunge, On the Verge of Hitting 73 Mark Against Dollar

Rupee Continues to Plunge, On the Verge of Hitting 73 Mark Against Dollar

New Delhi: It seems the Indian Rupee won’t wait for the year end to reach to the 73 mark against the US Dollar. On Wednesday, the Indian currency recorded a fresh low of 72.92 against the American currency amid renewed global trade war worries.

Earlier, the local currency opened 5 paise down at 72.75 against the American currency. Notably, ET had conducted a survey few days ago where experts cited that the Indian currency might slide down to 73. Also, the downfall in the local currency has made it one of the most worst performing currencies across the globe as it has witnessed around 12 per cent downfall on a year-to-date basis.

Foreign institutions intensified selling of domestic stocks on Tuesday, pulling out Rs 1,454 crore — their highest daily outflow in over three months — as money moved from riskier emerging markets to safe haven assets like the dollar.

Tarun Satsangi, Head-Commodity and Forex Research at Globe Capital Market said, “Now steep fall in the rupee is raising concerns about inflation, interest rate hikes and foreign portfolio outflows. The rupee has fallen by more than 5 percent in the last month alone, taking the year-to-date depreciation to over 12 percent, making it one of Asia’s worst performing currencies.”

Rupee was weighed down by rising global crude oil prices as India imports nearly 80 per cent of its fuel needs and a current-account deficit at a five-year high.

“The CAD is expected to widen to 2.8 per cent of the GDP in financial year 2018, up from 1.9 per cent last year. US-China, US-Turkey trade war also have a ripple effect on other currencies, including the rupee. We believe USD INR pair to test 73/74 in the days ahead,” said Satsangi.

Moreover, US dollar has been consistently performing well this year due to uptick in the economic growth, adding further trouble to other currencies.