The rupee plunged to a record low of 74.48 against the dollar on Thursday, amid a wild sell-off in the stock market and unabated foreign fund outflows. After opening weak at 74.37, the rupee slipped 26 paise to hit a fresh low of 74.48, even as demand for dollar strengthened. Strong demand for the American currency from importers, concerns of fears of rising fiscal deficit and capital outflows weighed on the domestic currency, PTI reported forex dealers as saying. Yesterday, the rupee snapped its six-session losing streak to end 18 paise higher at 74.21 against the US dollar after the American currency weakened abroad.
While a few economists have argued that the depreciating rupee will help the cause of exporters, ace stock market investor Shankar Sharma feels otherwise. “Our exports do not command that kind of pricing sort of power internationally. So, they are forced to rework the price down in dollar terms. It is a big gamble if you depreciate the rupee or you think rupee depreciation is good for export. I do not think it adds up at all. On the other hand, imports go up by 10-20%, as much as the currency has gone down,” he told in a recent interview to ET Now, taking stock of the declining rupee.
Meanwhile, other emerging market currencies too weakened, with Chinese yuan weakening slightly against the U.S. dollar on Thursday amid a global equity sell-off that shrank risk appetites. But analysts said the slip may have been capped by signs Beijing is tapping the brakes on outbound investment, Reuters reported.
Meanwhile, the BSE Sensex opened over a 1,000 points lower on Thursday tracking negative global cues. The Nifty opened below the 10,200 level and tanked nearly 300 points. The benchmark 10-year bond yield was down 3 basis points at 8% today.