Rupee tanks below 72-mark
Rupee tanks below 72-mark

Mumbai: The rupee Monday crashed below the 72-mark to end at a life-low of 72.45 against the $ on growing fears of contagion from an emerging-market rout and escalation of global trade war. Heavy speculative $ demand along with panic among importers sent the domestic currency tumbling by a sharp 94 paise to hit a historic low of 72.67 in mid-morning trade, triggering the central bank intervention to defend the currency. 

It finished the day 72 paise lower against the American currency - its biggest one-day crash since August 13. After a short-lived recovery, forex market sentiment once again turned volatile after US President Donald Trump decided to raise the economic and financial stakes of the global trade war on Friday. 

Adding to the fundamental stress, Trump also announced that the US administration was considering another $267 billion in tariffs on Chinese imports. The rupee had recovered on Friday to close 26 paise higher after a seven straight-day decline. 

Widespread concerns about the country's growing trade deficit as well as short-term debt liabilities and protectionist tendencies on the global front largely weighed on forex front, currency dealers said. 

Besides, rising oil prices and the weakening currency have already impacted the sentiment here. India's current account deficit (CAD) as a percentage of GDP declined marginally to 2.4 per cent in the April-June quarter of 2018-19 against 2.5 per cent in the year-ago. Strong portfolio outflows alongside RBI's $ sales to contain sharp rupee depreciation, resulted in depletion of foreign exchange (forex) reserves to $400.101 billion in the week to August 31, an RBI data showed. 

At the inter-bank foreign exchange (forex) market, the rupee opened with a gap-down at 72.18 against weekend close of 71.73. It quickly extended the losses in the morning deals to hit a record low of 72.67 prompting the RBI intervention in the currency market. 

The pull-back helped the rupee touch a session high of 72.07 before ending at 72.45, revealing a sharp loss of 72 paise, or 1.00 per cent. The Financial Benchmarks India private limited (FBIL), meanwhile, fixed the reference rate for the $ at 72.5745 and for the euro at 83.8081. In the cross-currency trade, the rupee continued to drift against the Pound sterling to finish at 93.66 per pound from 93.19 and dropped against the Japanese yen to close at 65.21 per 100 yens compared with 64.70 earlier. The home unit also fell back against the euro to end at 83.83 from 83.25 last Friday. 

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