Rupee Slumps to Over 2-Year Low, Totters Near 67/Dollar: 10 Facts

The rupee slumped to an over two-year low on Friday, weighed down on fears of a rate hike in the US. The sharp fall in Indian equity markets also hurt the rupee. The rupee fell to 66.99/dollar - its lowest since September 2013, when Reserve Bank of India Governor Raghuram Rajan took charge of the central bank amid a crisis-like situation. The Indian currency had closed at 66.65 per dollar on Thursday. Here is a 10-point cheat-sheet: 1) Traders said the Reserve Bank of India likely stepped in to support the rupee at around 66.98 per dollar, sparking a rebound. The rupee was at 66.81 in afternoon trade.  2) The renewed weakness in the rupee has come from external factors, in particular from the US, where the Federal Reserve is likely to raise rates for the first time in a decade. The rupee fell 2.1 per cent against the dollar last month, its biggest drop since August, and is down 0.3 per cent so far this month.  3) Federal Reserve Chair Janet Yellen, speaking before Congress' Joint Economic Committee on Thursday, said the United States may be "close to the point at which we should be raising" rates. This has reinforced expectations that the US central bank will hike rates in its policy meeting on December 16. 4) The strengthening in the euro, which the rupee closely tracks, also led to pressure on the Indian currency. "Unless RBI intervenes in a big way, rupee will remain under pressure," said Ashtosh Raina, head of forex trading at HDFC Bank in Mumbai. Some traders anticipate the rupee to fall to 67.50 to the dollar closer to the Fed policy meeting.  5) The Sensex fell nearly 250 points at day's low while Nifty slumped below 7,800 level today, tracking a selloff in global markets, a factor that also weighed on the rupee. However, Sensex pared some losses in afternoon trade and was down nearly 150 points. 6) The selloff in the global stock markets today has been attributed to the European Central Bank's stimulus package which fell well short of markets' high expectations. 7) Expectations of a Fed rate hike have led to selling pressure in emerging market assets. In India, foreign institutional investors sold equities and bonds worth over Rs 7,000 crore last month, pulling down stock markets and putting pressure on the rupee. Foreign investors have continued their selling spree this month, selling Indian stocks worth over Rs 600 crore. 8) In the Indian market, banking, IT and FMCG stocks in particular were under strong selling pressure. Infosys, HDFC Bank, ITC and Infosys were among the big Nifty losers. Bucking the weak trend, Sun Pharma surged 5 per cent after India's biggest pharma company said that one of its subsidiaries has received final approval from US drug regulator for generic version of Gleevec. 9) IT stocks have been under pressure in the past few sessions. Most Indian IT companies have 10-30 per cent of their workforce based in Chennai, where floods hit normal business activities. 10) Despite weak global cues, analysts say that Nifty has support at around 7,750 levels. And a breakthrough on the GST (Goods and Services Tax) Bill could be positive trigger for Indian markets. Asian markets ended weak today with Japan's Nikkei falling over 2 per cent and China's stocks down over 1.5 per cent. Overnight, Wall Street's benchmark S&P 500 stock index had its biggest one-day percentage decline since September 28, dropping 1.4 per cent. (With agency inputs)