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Abu Dhabi, UAEWednesday 26 September 2018

Indian rupee slumps to 70 per dollar at  record low

Currency has been among the hardest hit in Asia from the recent Turkey-led sell-off in emerging assets

An India Rupee note. The currency has been hit by the Turkish lira's contagion. Reuters
An India Rupee note. The currency has been hit by the Turkish lira's contagion. Reuters

The Indian rupee hit the 70 per dollar mark for the first time, tumbling to a record low, as a Turkey-led rout in emerging-market currencies intensified losses.

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Tumbling rupee

The rupee slipped as much as 0.2 per cent to 70.08 per dollar in Mumbai and is down almost 9 per cent this year in Asia’s worst performance.

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 that is already strained by higher oil prices.

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A weaker rupee could complicate the Reserve Bank of India’s job of keeping inflation in check.

The RBI’s monetary policy committee led by governor Urjit Patel has increased interest rates twice since June to curb price pressures, while also using foreign reserves to check currency volatility.

The central bank does not target the exchange rate and attributes any rate moves to its goal of containing rising prices.

“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,” Aditi Nayar, principal economist at ICRA in Gurugram, near the capital New Delhi, said on Monday.

“The RBI is likely to assess the trend in the rupee vis-a-vis the EM currency pack. If all EM currencies are depreciating, the rupee must weaken to protect export competitiveness.”

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