INR Vs USD: Concerns about Turkey's economic woes pushed the rupee down.
The battered rupee breached the 70 mark against the US dollar for the first time ever on Tuesday. After posting its weakest ever loss of Rs 1.09 against the US dollar on Monday, the rupee strengthened by 23 paise in early trade on Tuesday. However, at about 10:30 am, the rupee hit an all-time low of 70.1 per dollar and extended it to 70.09, as concerns about Turkey's economic woes persisted. Analysts expect the rupee to fall further to below 70 per dollar.
Here are 10 things to know about rupee's crash on Tuesday:
- The rupee crashed to all-time low of 70.09 against the US dollar, reported news agency Press Trust of India.
- However, economic affairs secretary Subhash Chander Garg said later that the fall in rupee was due to external factors and there was no need to worry at this stage."As currencies of other economies are also depreciating, intervention by the Reserve Bank of India (RBI), by selling dollars in the country, will not help much at this stage for stabilising the rupee. Even if the rupee falls to 80, it will not be a concern provided all other currencies depreciate," he was quoted as saying in a Reuters report.
- The 10-year benchmark bond yield inched up to 7.82 per cent after staying muted in early trade.
- "Panic demand of dollars from importers and strength in the dollar index pulled the rupee today. Also, intervention from Reserve Bank of India (RBI) is very limited in the forex market," said Rushabh Maru, Research Analyst, Anand Rathi Share and Stock Brokers.
- In early trade, the rupee traded at 69.68 against the US dollar after retail inflation fell to 9-month low of 4.17 per cent in July on declining vegetable prices which may prompt the RBI to pause interest rate hike in its next monetary policy review.
- "Given the prevailing risk aversion in the global markets, we don't rule out that the rupee will briefly cross 70/dollar before retracing to 69/dollar levels," said Aditi Nayar, principal economist at credit ratings agency ICRA.
- The falling rupee, which has so far lost over 8 per cent this year, has pushed up prices of imported items such as petroleum products, commodities, electronics and engineering equipment.
- The Turkish lira has weakened 45 per cent against the dollar this year.
- Analysts say the crisis has been a long time coming and reflects Turkey's refusal to raise interest rates to curb double-digit inflation and cool an overheated economy. President Tayyip Erdogan has said that Turkey is the target of an economic war, denying that economic fundamentals were behind the lira weakness.
- Meanwhile, a weaker rupee strengthened IT stocks. All 10 stocks of the Nifty IT index traded in the green at 11:24 am. The Sensex traded at 37,799.66, up 154.76 points or 0.41 per cent and the Nifty50 was at 11,408.40, with a gain of 52.65 points or 0.46 per cent. (With agencies inputs)
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