Rupee Registers All-Time Closing Low Of 72.97 Against Dollar: 10 Points

Rupee hit life-time low of 72.99, but settled 46 paise lower for the day Rising crude oil prices, concerns on US-China trade war hurt rupee Investors raise bets that RBI will need to hike rates twice this year

NDTV Profit Team

18 Sep 2018, 06:05 PM IST

The rupee is down over 14% against the American currency so far this year

The rupee also logged a fresh life-time low of 72.99 against the US dollar during the session, before settling at 72.97 for the day.
"There was no reason for the rupee to fall so much," Reuters cited one forex dealer as saying. "Crude prices went up and suddenly people started shorting, that shows there's no confidence in the rupee. The RBI sold about $400 million to $500 million to calm markets, but that didn't work."
The value of rupee between 72 and 73 against the US dollar is fair, the agency had cited a government source as saying earlier in the day. "The rupee could again come under pressure once the new US sanctions on Iran come into force" due to a possible rise in oil prices, the finance ministry source who declined to be named told Reuters.
Investors have increased bets that the Reserve Bank of India (RBI) will need to raise interest rates at least two more times this year to shore up the battered currency after authorities' previous efforts to defend the currency failed to sway markets.
Analysts doubt that measures announced by the government will lead to significant inflows, say analysts, adding that the overall investment sentiment for emerging markets is negative.
Last week, Finance Minister Arun Jaitley had said the country would cut "non-necessary" imports, ease overseas dollar borrowing restrictions for manufacturers and relax rules around banks raising masala bonds, or rupee-denominated overseas bonds.
The latest escalation in the Sino-US trade war clouded the outlook for crude demand from the two countries, the world's top crude consumers. Brent crude - a global benchmark for crude oil - was at $77 per barrel levels. High crude oil prices trigger concerns on the current account deficit front, as India meets more than 80 per cent of its oil requirements through imports. Trade deficit stood at $17.4 billion in August, lower than a near five-year high of $18.02 billion in the previous month.
The International Monetary Fund (IMF) estimated that the real effective depreciation of Indian rupee is between six and seven per cent compared to December 2017. IMF spokesperson Gerry Rice, however, said the currencies of many of India's trading partners, including those in the emerging markets, too have depreciated against the dollar.
Domestic markets entered a second day of losses amid weakness in Asian peers, with the BSE Sensex closing 294 points lower at 37,290 and the Nifty declining 98 points to 11,278.
The rupee had closed at 72.51 against the greenback the previous day. It is down more than 14 per cent against the American currency so far this year stung by an emerging markets sell-off, making it the worst performing Asian currency.

(With agency inputs)