Rupee hits new record low of 70.82, plunges 23 paise against USD

Extending its free-fall, the Indian rupee on Thursday hit a fresh low of 70.82 per US dollar versus previous close of 70.59 in intra-currency trades on heavy month-end demand from importers, sustained foreign capital outflows and macro concerns. At the Interbank Foreign Exchange (Forex) market, the local currency opened a tad higher at 70.57 a dollar from its previous close of 70.59 but slipped to hit a fresh low of 70.82, down by 23 paise. Since January, rupee has lost 10 percent making it Asia’s worst performing currency.

The Indian currency on Wednesday recorded a biggest single day decline against the dollar on Wednesday since August 13. Yesterday, the Indian currency closed the day at a historic low of 70.59 after depreciating to all-time low of 70.65 due to month-end demand from importers and macro concerns.

“The rupee has depreciated today on account of month-end dollar demand from importers. Crude oil prices have also increased in the international market in the last couple of sessions. This has pressurized the rupee,” Rushabh Maru, Research Analyst, Anand Rathi Shares and Stock Brokers said yesterday.

Yesterday, the yield on the benchmark bond surged by more than two basis points over Tuesday’s close of 7.89 percent to 7.91 percent. The Indian rupee has also been impacted by the contagion effect of the sharp decline in the value of the Turkish lira and the accompanying fall in the currencies of the other emerging markets. The dollar index – dollex – hovered around 94.72 levels down from 94.77.

Other than worried related to widening CAD and fiscal deficit, three key factors have trigger the downside movement of the Indian rupee, Radhika Rao, economist at DBS Bank said. “A sense that the authorities are tolerant of a weaker rupee, primarily reflected in a lower Indian rupee real effective exchange rate,” she said.