New Delhi: The government on Tuesday blamed external factors for the rupee’s fall to beyond 70 against the US dollar, reported PTI. Economic affairs secretary Subhash Chander Garg said the “rupee is depreciating due to external factors” and there is “nothing at this stage to worry”.
In early trade today, the rupee crossed past the psychological 70-mark to hit an all-time low of 70.08 a dollar for the first time amid concern over the risk of contagion from Turkey’s financial-market turmoil. However, the home currency recovered and was trading at 69.86, up 0.09%, at 1.47pm.
Traders said, on the condition of anonymity, that rupee recouped some of the losses as state-run banks sold the dollar on behalf of the Reserve Bank of India. So far this year, the rupee has weakened nearly 9%, while foreign investors have sold $6.8 million and $5.15 billion in equity and debt markets, respectively.
“The chaos in Turkey has led investors to pull back from asset classes that are considered risky and emerging market currencies have suffered the most,” Religare Broking said in a note.
Analysts believe that factors such as broader emerging market currency movement, dollar strength, and the trend in crude oil prices will continue to drive the outlook for the rupee in the immediate term.
“Broader emerging market currency movement, dollar strength, and trends in crude oil prices will drive the outlook for the rupee in the immediate term,” said Aditi Nayar, principal economist at ICRA Ltd. “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.”