Rupee Nears All-Time Low amid Selloff

The rupee on Wednesday opened lower at 68.49 per dollar versus its previous close of 68.37. The selloff in the currency quickly gathered pace, with the rupee slipping to 68.67 against the greenback.

The rupee is now trading just 18 paise away from its all-time low of 68.85 per dollar, a level seen on August 28, 2013. The selloff in the rupee hit sentiments in the equity markets. The Sensex slumped over 150 points or 0.7 per cent and the Nifty slipped below 7,000 in morning trade.

The rupee has been one of the worst performers in Asia this year, falling by over 3 per cent, mainly on account of strong foreign investment outflows from equity markets. Foreign institutional investors have pulled out a net of over $2 billion from Indian shares since the start of the year.

According to experts, outflows of India-dedicated funds outpaced emerging market peers during the period.

Currency experts from Edelweiss said the Reserve Bank of India is likely to “intervene” in currency markets today to check sharp volatility in the rupee.

The government has downplayed the fall in the rupee, linking it to the global turmoil in risk assets. Last week, Economic Affairs Secretary Shaktikanta Das said the decline by the rupee is not exceptional and the currency is performing relatively well.

According to Mr Das, the rupee had declined by 6.5 per cent against the US dollar since last April, but it has risen against the euro and the yen while holding its own against the sterling.

Reserve Bank Governor Raghuram Rajan on Monday said he was not in favour of devaluing exchange rates to boost economic growth, signalling India will not join other countries such as China or Japan in pushing down their currencies. But Dr Rajan reiterated the central bank would strive to curb excessive volatility.

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Source:Ndtv