It’s real! rupee sinks below 70

It’s real! rupee sinks below 70

The rupee on Thursday slid 26 paise to close below the 70mark for the first time against the US currency, hammered by strong dollar demand amid...

Mumbai: The rupee on Thursday slid 26 paise to close below the 70-mark for the first time against the US currency, hammered by strong dollar demand amid growing concerns over widening trade deficit. The Indian currency collapsed to a historic intra-day trading low of 70.40 before closing at fresh life-time low of 70.15 per dollar, down by 26 paise or 0.37 per cent over the previous close. The RBI intervened in the currency market to save the beleaguered currency, currency traders said.

Country's trade deficit soared to a near five-year high of $18 billion, data released by the commerce ministry on Tuesday showed. A massive exodus of capital outflows from both equity and debt market against the backdrop of US Federal Reserve's anticipated interest rate policy is triggering wide panic, a forex dealer said.

High current account and fiscal deficits mean the central bank may have little room to tap into its reserves to defend the currency, the dealer said. The Indian currency has lost 10.5 per cent of its value this year so far against the backdrop of India's ballooning fiscal deficit and surging crude prices and mounting worries surrounding the US-China trade conflicts.
Reversing its brief rebound, the rupee opened with a gap-down at 70.19 against Tuesday's close of 69.89 at the inter-bank foreign exchange (forex) market.

Heaping under intense dollar pressure, it plunged to hit a fresh lifetime low of 70.40 in mid-morning deals also impacted by falling local equities. After reversing earlier steep losses on the back of stepped up dollar selling by state-run banks, the rupee finally ended the day at 70.15. The Financial Benchmarks India private limited (FBIL), meanwhile, fixed the reference rate for the dollar at 70.2287 and for the euro at 79.9718.

Emerging market currencies and stocks remained in the investors' cross hairs as worries mounted despite fresh rally for the Turkish lira. Headwinds in the form of widening trade deficit due to surging crude prices amid unsupportive global factors kept forex sentiment shaky and largely weighed on the local unit. Allaying worries over the rupee's slide, Niti Aayog Vice-Chairman Rajiv Kumar said that the currency was coming back to its natural value after witnessing a 17 per cent appreciation in the last three years.

In the cross-currency trade, the rupee remained under pressure against the euro to close at 79.80 compared to 79.68 and also fell back against the Japanese yen to finish at 63.28 per 100 yens from 63.05 earlier. The home unit, however recovered against the British pound to end at 89.12 per pound from 89.21. The forex and money market will be closed on Friday on the account of the Parsi New Year.

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