Rupee slides to a new low vs dollar

The rupee slid to a fresh low against the dollar on Thursday as the U.S. currency continued to relentlessly strengthen against all major currencies and India’s widening trade deficit dampened sentiment in the foreign exchange market.

The recent crash of the Turkish lira also continued to impact all emerging market currencies.

The rupee, which opened weaker at 70.26 against the dollar and slumped to an intraday low of 70.40, closed at 70.16, down 27 paise, or 0.38%.

The Reserve Bank of India was not seen intervening aggressively to support the rupee, currency dealers said.

“Though the RBI is trying to rescue the scenario by increasing the rates, the interventions have been slow as it very well knows that depleting reserves against the global wave of dollar strength is not going to yield much benefit,” said Kishore Narne, Head - Commodity & Currency, Motilal Oswal Securities.

Foreign exchange reserves have declined by $23 billion in the last four months, and stood at $402.7 billion as of the week ended August 3, 2018.

The weak trend in the global markets along with the fall in the rupee affected investor sentiment in the equity market as well, with the 30-share Sensex losing 188.44 points, or 0.50%, to close at 37,663.56.

Kotak Mahindra Bank, Vedanta, HDFC, Wipro, L&T and Tata Steel were among the top losers, shedding 1-4% each.

‘May not help exporters’

The rupee’s fall may not be as beneficial to exporters as widely believed since other emerging market currencies were also depreciating, said Ravi Sehgal, chairman of EEPC India.

“Our import intensity of exports is also increasing,” Mr. Sehgal said, adding that short-run volatility “exacerbates uncertainty for the exporters.”

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Printable version | Nov 24, 2020 4:07:52 AM |

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