Mumbai: The rupee crumbled by a staggering 37 paise to end at a fresh lifetime low of 71.58 against the resurgent $ on Tuesday as persistent trade worries and macro concerns continue to proliferate.
The rupee stretched its record fall for the fifth-straight session even as the RBI remained mostly on the side-lines
The rupee stretched its record fall for the fifth-straight session even as the RBI remained mostly on the side-lines, currency market participants said. The rupee opened lower at 71.24 from the previous close of 71.21 at the inter-bank foreign exchange (forex) market.
The domestic currency has been under pressure in recent past with deluge of headlines covering from a range of fundamental concerns against the grim backdrop of surging global crude prices and sustained capital outflows.
The ballooning of crude prices has significantly increased the country's oil import bill and it can also lead to a worsening of the current account deficit and fiscal deficit for the domestic economy. Benchmark Brent crude oil traded at USD 79.26 a barrel in early Asian trade.
Fuel prices in the country touched new highs Tuesday due to the twin impact of a free-fall in local currency and firming crude oil prices, fanning fear about a spike in inflation. The government, however, said the currency will stabilise on its own as there were no domestic factors contributing to this depreciation.
"Rupee has depreciated primarily on trade war fears and rise in global crude oil prices. The government does not have control over these, so there is only so much we can do," a top finance ministry official said.
Globally, the US dollar surged against developed and emerging-market currencies over an escalating trade conflict between the US, China and Canada. Emerging market currencies such as the Argentine peso, Turkish lira, South African rand, Brazilian real, Indonesian rupiah and Indian rupee sank as investors fear these export-oriented economies will be caught in the escalating trade war.
Against a basket of other currencies, the dollar index was up at 95.44. Investors were also nervous after the US President Donald Trump said he wanted to impose new tariffs on more Chinese goods by this weekend. Local stocks also plunged for the fifth day in a row due to multiple factors like rising crude prices, tumbling rupee and ongoing global trade tiff.
The bond yield curve also shot-up substantially to hit a fresh four-year high of 8.06 per cent. The Indian rupee has been among the worst performing currencies in the region, attributed to its current account deficit and mayhem in emerging markets caused by the Turkish lira and Argentina crisis amid contagion fears.