NEW DELHI: The rupee on Tuesday extended its fall and breached the psychological 70-mark for the first time against the US dollar, hitting a new low of 70.08 in intra-day trading.
On Monday, the currency had recorded its biggest intra-day fall in five years, hitting a low of 69.93, following a global currency crisis after the Turkish lira was battered.
Read here: Why Turkish currency is tumbling
On Monday, the rupee closed as the worst performing Asian as the contagion from the collapse of the Turkish lira spread to emerging markets. The rupee has been on the downslide this year, having slipped 9 per cent in 2018.
“The fall in rupee is in line with global decimated emerging markets currency, accentuated by the Turkish crisis,” Sanjiv Bhasin, executive VP-Markets & corporate Affairs, India Infoline told TOI.
Reflecting upon the brighter side of the development, Bhasin noted, “(It) should be a good catalyst for exports and also makes up for over valuations of rupee versus fiscal deficit to calm the people with negative perception”.
India’s currency has been among the hardest hit in Asia from the recent Turkey-led sell-off in emerging assets, thanks to a wide current account deficit (CAD) that’s already strained by higher oil prices. A weaker rupee could complicate the Reserve Bank of India’s (RBI) job of keeping inflation in check.
“RBI will not be comfortable at these levels. It was seen defending rupee at all levels,” news agency PTI had quoted a senior treasury official of a public sector bank as saying, on Monday.
In Tuesday’s early trade, rupee had recovered to some extent before tumbling again.
Broader emerging-market currency movement, dollar strength, and the trend in crude oil prices will drive the outlook for the rupee in the immediate term,” news agency Bloomberg quoted Aditi Nayar, principal economist at ICRA.
At 10.50 am, the 10-year benchmark bond yield inched up to 7.82 per cent after staying muted in early trade. The equity markets were holding up, with Sensex and Nifty gaining almost half a per cent each.