The Indian rupee regained nearly 60 paise vs US dollar from an all-time low level of 69.09 per USD in the early deals on Friday at the foreign exchange market, possibly after the Reserve Bank of India (RBI) intervened with an aim to arrest further plunge. According to the latest rupee to dollar exchange rate today on Bloomberg, the rupee surged as much as 60 paise from the all-time low of 69.0925 and made a day’s high of 68.4863 per US dollar. The Reserve Bank of India was suspected to have sold US dollars through PSU banks at around the 69.09 rupee level, Reuters reported citing unidentified traders.
Earlier yesterday, the rupee crashed to its all-time low breaking the level of 69 per US dollar level for the first time in history. According to various expert, the record low value of Indian rupee against US dollar was mainly due to rising crude oil prices, trade war tensions between US and China and capital outflows from domestic markets. Earlier yesterday, in the late trade, rupee managed to recover partly but settled at a record low value of 68.79 against US dollar at the interbank foreign exchange market.
“In the period ahead, expectations of three rate hikes by Fed this year is likely to define the path that rupee can be expected to take. The anticipation of US laying tariffs on India as well as withdrawal of benefits for Indian industries, can be expected to add to these woes,” Anis Chakravarty, Partner and Lead Economist, Deloitte India told FE Online.
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The Reserve Bank of India has fixed a reference rate or 68.9389 vs US dollar on Thursday, 0.6% higher than the reference rate of 68.5246 fixed on Wednesday. Notably, RBI fixed a lower reference rate for rupee against per unit euro and pound at 79.6382 and 90.2134, respectively. According to RBI, the rupee to yen reference rate was set at 62.53 per 100 yen.
As at yesterday’s closing value of rupee against US dollar, the rupee has been the worst-performing currency in Asia. The rupee has lost 7.7% of its value vs the United States dollar.
According to the global credit rating agency Moody’s Investor Service, India’s large foreign exchange reserves provided a good buffer despite the increase in the CAD (current account deficit). “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 said.