The domestic currency slid 26 paise to a new record low of 71.0013 against the US dollar during early morning trade on Friday.
Rupee at 71: The rupee opened at a fresh record low on Friday, breaching the 71-mark for the first time. The domestic currency slid 26 paise to a new record low of 71.0013 against the US dollar during early morning trade on Friday, Bloomberg data showed. At this level, the rupee has plunged 11.16% in 2018 from the previous year’s closing mark.
The rupee had closed at a fresh low of 70.74 against the greenback on Thursday. According to forex dealers, month-end demand for the US currency from importers, along with a strong dollar overseas and rising crude oil prices weighed heavy on the domestic currency. During the day, the rupee plunged to as low as 70.90 to the US dollar.
“Indian Rupee has depreciated around 11% year to date. Higher crude oil prices, demand from defense and oil marketing firms have contributed to the latest bout of weakness,” said VK Sharma, Head Private Client Group & Capital Market Strategy at HDFC Securities. “Rupee was overvalued on trade-weighted real effective exchange rate. We are not overly concerned about the rupee beyond 72 level,” he added.
Nair added that robust FDI flows in e-commerce companies, healthy forex reserves may limit the downside of the rupee.
“Month-end dollar demand and concerns of a widening CAD continued to take a toll in the domestic forex markets…” Geojit Financial Services said in a report. “Also investors remained cautious ahead of the GDP and fiscal deficit numbers on 31 Aug… The outlook of the local currency remains weak and on the lower end, 71 is a psychological level to watch while 69.58 can be watched above which Rupee is likely to test 68.48,” the note added.