Rupee sinks 49 paise to end at lifetime low of 70.59 to US dollar

29 August 2018, 07:26 PM
Rupee sinks 49 paise to end at lifetime low of 70.59 to US dollar (File photo)
Rupee sinks 49 paise to end at lifetime low of 70.59 to US dollar (File photo)

The rupee on Wednesday crashed by a staggering 49 paise or 0.70 per cent to close at a historic low of 70.59 against the US currency due to strong month-end dollar demand from oil importers and foreign fund outflows.

It was the biggest single-day crash since August 13 when the unit crumbled 110 paise or 1.6 per cent. The rupee previously had closed at a record low of 70.16 to the dollar on Monday.

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The slide was triggered by factors like crude prices hitting multi-month highs fuelled by supply shocks along with concerns over widening current account deficit (CAD).

The Indian currency collapsed to another record low of 70.65 during the day as investors finally hit the panic button after reports highlighted risks of India breaching the 3.3 per cent fiscal deficit target for 2018/19.

Traders also reported hedging-related offtake as importers rushed to pay forward premium.

“Focus will now shift to India’s GDP and fiscal deficit data due to be released on Friday. A near-term range for the rupee is 70.20 and 70.75,” Rushabh Maru, Research Analyst, Anand Rathi Shares and Stock Brokers.

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The rupee has fallen by 10 per cent this year so far - making it the worst-performing currency in Asia.

Reversing its brief recovery trend, the rupee resumed with a gap-down at 70.32 compared to Tuesday’s close of 70.10 at the inter-bank foreign exchange (forex) market.

Being engulfed in selling pressure, the local unit subsequently hit a lifetime low of 70.65 in late afternoon deals before ending the day at 70.59 with a loss of 49 paise, or 0.70 per cent.

The Financial Benchmarks India private limited (FBIL), meanwhile, fixed the reference rate for the dollar at 70.5046 and for the euro at 82.3376.

The 10-year benchmark bond yield ended higher at 7.92 per cent.

Meanwhile, the Credit rating agency Moody’s Investors Service on Tuesday said there are risks of India breaching the 3.3 per cent fiscal deficit target for the current financial year as higher oil prices will add to short-term fiscal pressures.

Also Read | Rupee falls 22 paise to 70.32 against US dollar

On the energy front, crude prices traded marginally up supported by news of a fall in Iranian crude supplies as US sanctions deter buyers.

Benchmark Brent crude oil was trading at USD 76.47 a barrel in early trade.

Globally, the US dollar bounced back as relief about a US-Mexico trade deal gave way to concern among investors that the conflict over trade between the US and China was not about to end soon.

The dollar index, which shows greenback’s strength against a basket of currencies, was trading up 0.22 per cent at 94.83.

In the cross-currency trade, the rupee remained under pressure against the British pound and finished at 90.98 per pound from 90.41 and also drifted sharply against the euro to end at 82.34 as compared to 82.00 earlier.

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The local unit also fell back against the Japanese yen to close at 63.46 per 100 yens from 63.10.

In forward market today, premium for dollar showed a steady to firm trend.

The benchmark six-month forward premium payable in December was steady at 102-104 paise, while the far-forward June 2019 contract edged up to 252-254 paise from 251-253 paise on Tuesday.

First Published: Wednesday, August 29, 2018 07:20 PM

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