Rupee plunged to a new historic low level on Tuesday, plunging 36 paise to 71.5737 against the US dollar, battered by a strong US dollar, coupled with higher crude prices and emerging market currencies woes. In closing deals, the rupee recovered slightly to 71.5650 against the greenback, Bloomberg data showed. While continuing its free fall for the second day this week, the rupee closed above the 71.50-mark on Tuesday for the first time ever.
The rupee had closed above the 71-mark for the first time on Monday — settling at a fresh level of 71.2050 against the American currency — after hitting a record low of 71.2137 against the dollar in intra-day trade. “Due to the strengthening of the dollar at the global level, the trend of declining Indian rupee continues. On Monday, the rupee had reached close to Rs 71.21 for the first time. Now, on Tuesday, the rupee has reached a record low of 71.57 against the US dollar,” Rahul Sharma, Senior Technical Research Analyst, Equity99, told FE Online.
“The fall in the rupee intensified due to a strengthening dollar, which lifted up on fears of a Chinese slowdown and economic turbulence in emerging market economies,” Sharma said. He added that besides the Indian rupee, other emerging market currencies such as Indonesian rupiah, Turkish lira, South African rand, Russian rouble and Mexican peso also skidded against the dollar.
Rushabh Maru – Research Analyst , Anand Rathi Shares and Stock Brokers, said: “The rupee continues to make a new record low on account of crisis in the emerging market currencies. Further, consistent rise in the crude oil prices and dollar index has kept sentiments bearish. There are talks of rupee moving towards 72-73 levels hence there is lot of speculative dollar buying in the market which is driving the currency lower everyday.”
According to an SBI Ecowrap report, emerging market currencies have witnessed volatility since the beginning of the year and have depreciated considerably on the back of US policies on free trade and a strengthening US economy. “Indian Rupee is one of the worst performing among its Asian peers one of the reasons for which could be the spike in current account deficit on the back of crude oil price increase. After appreciating marginally in Jan’18 Rupee has witnessed depreciation every month,” the report said.