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Rupee breaches 69/dollar mark, now trading at 68.99

The rupee opened at 68.89 and hit an all time low of 69.09 a dollar, breaching the earlier low of 68.86 hit on 24 November 2016. At 2 pm, rupee was trading at 68.99, down 0.51% from previous close of 68.63.


The rupee is down over 7% against the US dollar so far this year. Photo: Reuters

Mumbai: The rupee weakened past the 69 mark for the first time on Thursday to hit a record low against the US dollar, following further spike in crude oil prices and concerns of higher inflation and widening current account deficit. The rupee opened at 68.89 and hit an all time low of 69.09 a dollar, breaching the earlier low of 68.86 hit on 24 November 2016. At 2 pm, rupee was trading at 68.99, down 0.51% from previous close of 68.63.

Surge in Brent crude prices ensuring that the inflationary concerns are very much alive, “ said Edelweiss Financial in a report to its investors.

Overnight, global oil prices are near the highest level since 2014 after data showed US crude inventories fell by the most in almost two years and exports climbed to a record. Oil prices gaining continuously after US pressed its allies to end all imports of Iranian oil by a November deadline and said it didn’t want to offer any extensions.

A fall in Asian currencies, with Chinese Yuan sliding for the 10th straight day, its longest losing streak since March 2014 also dampened the sentiment. Traders fear that US-China trade war may evolve into a currency war.

“Surge in Brent crude prices ensuring that the inflationary concerns are very much alive, “ said Edelweiss Financial in a report to its investors.

“Unlike 2013, current pressure on currency is emanating from multifold developments in external macro fronts, where role of emerging market central banks is limited .We have to wait for automatic stabilisation like very strong USD or high yields start impacting them adversely,” said Soumyajit Niyogi, associate director at India Ratings and Research Pvt. Ltd.

“The pressure on the rupee has come predominantly on account of the firming up of oil prices again, which have stoked domestic inflation concerns. Alongside, embrace of trade conflict by the Trump administration has hurt risk appetite and repercussions are being sensed across global equities and the forex markets. Sentiments are expected to remain jittery on the back of intensifying trade spat, weakening emerging market currencies and rising crude oil prices,” said Jayant Manglik, president at Religare Broking Ltd.

“The outlook for the Indian currency has turned bleak for the near-term with the rupee slipping below its crucial support of 68.50 (spot) mark. We expect it further depreciate towards the 69.50 mark”, Manglik added.

The rupee is the worst performing currency in Asia, plunging over 7.3% so far this year, followed by the Philippine peso and Indonesian rupiah—down 6.7% and 4.3%, respectively. The Chinese yuan has depreciated 1.6%.

Traders worried over how a trade war between US and China could curb growth at a time when the US Federal Reserve is accelerating its rate hikes and oil edges higher.

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