MUMBAI The Indian rupee collapsed to a lifetime low of 69.10 against the US dollar by plunging 49 paise in early trade on Thursday as rising crude oil prices deepened concerns about the country’s current account deficit and inflation dynamics.
The rupee had touched its previous record low of 68.8650 per dollar on November 24, 2016.
Consistent dollar demand from banks and importers, mainly oil refiners, following higher crude oil prices kept the rupee under pressure.
At the interbank foreign exchange market, the rupee opened at 68.87 a dollar against 68.61 previously and sank to 69.10 in morning deals, falling 49 paise.
Global oil prices have climbed after the US asked its allies to end all imports of Iranian oil by November.
Concerns over supply disruptions in Libya and Canada also pushed prices higher. Higher crude oil prices and a declining rupee are a double whammy for India, forex dealers said.
Traders said they were hopeful the Reserve Bank of India (RBI) would step in to prevent further losses in the currency.
The RBI’s battle to contain a falling rupee just got tougher. The current account deficit is widening and a weak global investment climate coupled with policy paralysis in New Delhi, sticky inflation and slowing growth have increased the aversion of foreign investors to India, pushing the capital account into the red.
Last week’s move by rating agency Standard & Poor’s to cut the country’s credit rating outlook to “negative” has complicated matters further for the RBI, which has few options other than intervention and tinkering with rules on export credit to encourage inflows, RBI officials say.
Meanwhile, the benchmark Sensex was down by 90.26 points, or 0.25 per cent, at 35,126.85 in early trade on Thursday. (Agencies)
Be Part of Quality Journalism
Quality journalism takes a lot of time, money and hard work to produce and despite all the hardships we still do it. Our reporters and editors are working overtime in Kashmir and beyond to cover what you care about, break big stories, and expose injustices that can change lives. Today more people are reading Kashmir Observer than ever, but only a handful are paying while advertising revenues are falling fast.