Rupee Reach Rs 70 mark against US dollar.
For the first time in history, the Indian Rupee hit a record low breaching the Rs 70 mark against US dollar on Tuesday. The currency had recovered from an all-time low of 69.91 and strengthened by 23 paise to 69.68 against the US dollar in opening trade, it, however, plunged quickly. Although it recovered quickly to 69.97 at the interbank foreign exchange market, the drop left everyone talking online.
While some were quite sceptical about how the domestic currency would fair in the ongoing Turkish currency turmoil, others couldn’t stop taking a jibe at the government and cracking jokes.
Latest data, however, showed that retail inflation fell to 9-month low of 4.17 per cent in July on declining vegetable prices which may prompt the Reserve Bank to pause interest rate hike in its next monetary policy review.
New Delhi: The Indian rupee (INR) today nosedived to a record low against US dollar (USD) amid, tracking losses in emerging-market currencies on continued turmoil in Turkey. The rupee closed at a record low of 69.93 against US dollar, tumbling 109 paise. On Friday, the rupee had closed at 68.84 against the US dollar. Investors rushed to safe-havens such as the US dollar and the yen after a plunge in the Turkish Lira sent all emerging market currencies sharply lower. The Sensex also fell sharply today, ending 224 points lower.
Here are 10 things to know about rupee’s plunge today:
1) The Turkish lira has fallen about 45% against the greenback this year on worries over Turkish President Tayyip Erdogan’s increasing control of the economy and a deepening diplomatic rift with the US.
2) In a note forex advisory firm IFA Global said, “The psychological 70 mark is now in sight.”
3) In the wake of weakness across the board, “the RBI may be less keen to intervene. It may do so just to curb volatility and desist speculators,” IFA Global added.
4) The decline in the lira “may fuel volatility in emerging-market assets and dampen investor sentiment in the near term, as markets are already skittish,” said Kerry Craig, global market strategist at JPMorgan Asset Management.
5) The JPMorgan analyst however said that the “drivers of the lira’s decline are very specific to Turkey. Therefore it should not derail the positive fundamentals in other emerging markets over a longer-term.”
6) Another key data point to be watched today is retail consumer inflation data for July due after market hours. A Reuters poll estimates July inflation of 4.51% compared with a 5-month high of 5% hit in the previous month.
7) The Sensex plunged today by over 300 points at day’s low, tracking a selloff in other equity markets, before settling 224 points lower.
8) IT stocks however gained today, with NSE IT index up over 1.3%. Tech Mahindra, and HCL Tech were among the top gainers. A weak rupee boosts the rupee earnings of IT companies.
9) Turkey’s central bank today said it was ready to take “all necessary measures” to ensure financial stability after the collapse of the lira. The statement came after the Turkish lira hit record lows against the dollar amid a widening diplomatic spat with the United States.
10) The detention of US pastor Andrew Brunson since October 2016 on terrorism charges has sparked the most severe crisis in ties between the two NATO allies in years. The Turkish central bank has defied pressure to hike interest rates which economists said would curb the fall of the lira. Turkish President on Saturday called interest rates as “tool of exploitation” that makes the poor poorer and the rich richer.
In the last two reviews, the RBI had raised the key repo rate by 0.25 per cent each on inflationary concerns. The next bi-monthly policy is to be unveiled on October 5.