A new low for the rupee

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Published: May 19, 2018 3:14:25 AM

The rupee has depreciated close to 6% against the dollar since the beginning of this year, in line with currencies of other emerging nations.

rupee, dollar, rupee against dollar, economyCurrencies are getting pummelled as surging US interest rates are leading to a flight of capital back to the US, and India, which depends on foreign markets for three-fourths of its oil needs, is going to be hit badly. (Reuters).

The rupee has depreciated close to 6% against the dollar since the beginning of this year, in line with currencies of other emerging nations. This week, the Indian currency traded near a 16-month low, prompting RBI to intervene. Last year, the rupee appreciated 6%.

Currencies are getting pummelled as surging US interest rates are leading to a flight of capital back to the US, and India, which depends on foreign markets for three-fourths of its oil needs, is going to be hit badly.

While the depreciation of the rupee will help exports, a larger oil import bill—Brent prices have touched $80 a barrel—could mean that India’s current account deficit would widen to 2.3% of GDP in the current fiscal, from an estimated 1.9% in FY18, according to HSBC Global Research.

rupee, dollar, rupee against dollar, economy

rupee, dollar, rupee against dollar, economy

rupee, dollar, rupee against dollar, economy

rupee, dollar, rupee against dollar, economy

rupee, dollar, rupee against dollar, economy

Portfolio outflows have picked up as foreigners have sold $3.3 billion in Indian debt so far this year. Total outflows from the debt and equity markets combined stand at $5.9 billion. India’s foreign exchange reserves have also fallen as much as $7 billion for their peak.

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