Rupee Collapses To Lifetime Low Of 72.91 Against US Dollar: 10 Points

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The domestic currency continued to sink at the forex market on Wednesday. The rupee sunk to an all-time low of 72.91 against the US dollar after opening at 72.87 earlier in the day. The domestic currency was quoting 22 paise lower at a fresh record low of 72.91 against the US dollar in morning trade amid surging crude oil prices and uanabated foreign fund outflows, reported news agency Press Trust of India (PTI). Escalating trade war concerns, consistent dollar demand from banks and importers, mainly oil refiners, following higher crude oil prices, kept the rupee under pressure, dealers were quoted as saying in the PTI report.

Here are 10 things you should know about the rupee-USD rate:
  1. On Tuesday, the rupee touched a fresh lifetime low of 72.75, before settling at 72.70, an all-time closing low.
  2. The rupee has been hitting multiple lows almost every day this month, thus becoming the worst performing Asian currency this year.
  3. The rupee has weakened about 12 per cent this year, according to a report by news agency Reuters.
  4. The Reserve Bank of India (RBI) has been intervening in the forex market regularly to smooth volatility. The intervention has taken a toll on foreign exchange reserves which fell to $400 billion in August — enough to cover eight months of imports, according to a report by news agency Bloomberg.
  5. The current account deficit hitting a five-year high and a worsening balance of payments that slipped into the red in April-June for the first time in six quarters has hit the rupee hard.
  6. The RBI is considering turning to wealthy Indians living abroad, like it did in 2013 when a discounted swap window lured inflows of about $34 billion. A government official confirmed that this move was being considered to stem the rupee fall, stated the Bloomberg report.
  7. Indian bonds also fell tracking a weaker rupee, which could stoke inflationary pressures given the rising cost of crude oil and other imported commodities, stated the Reuters report. The 10-year benchmark bond yield rose to 8.19 per cent, its highest level since November 17, 2014.
  8. Foreigners have sold a net $6.5 billion so far this year with most of the outflows in debt markets where investors have seen heavy mark-to-market losses due to the plunging rupee.
  9. Meanwhile, the dollar index, against a basket of six major currencies, was 0.15 per cent lower at 95.128 on Wednesday.
  10. Oil prices rose following a report that crude inventories in the United States fell and as looming sanctions against Iran raised expectations of tightening supplies, with top producer Russia warning of a “fragile” global crude market. US West Texas Intermediate (WTI) crude futures were at $69.81 per barrel at 0047 GMT, up 56 cents, or 0.8 per cent, from their last settlement. (With Agencies inputs)

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