Rupee slumps 26p to close at historic low of 71 per $

Source: The Hitavada      Date: 01 Sep 2018 11:46:09


 

MUMBAI,

(PTI),

THE rupee on Friday slumped 26 paise to breach the 71-level against the US dollar for the first time in history due to worsening macro environmental factors and heavy month-end dollar demand from importers. The domestic unit settled the day with a loss of 26 paise, or 0.37 per cent at its lifetime low of 71.00 to dollar. Analysts said the RBI is intervening very selectively to contain volatility while the Government seems to be comfortable amid a slide in emerging market currencies.

The rupee has been the worst among the large emerging market peers, losing over 10 per cent in 2018 so far. The currency fell more than 3.7 per cent in August and over 1.5 per cent this week as high crude oil prices and expectations of US Fed rate hike took a toll on the rupee. Dealers said uncertain economic cycles, geopolitical worries along with macro headwinds and confusing monetary messages are leaving investors in a deep fog about future exchange rate trends.

The stumbling rupee opened with a gap-down at 70.95 against overnight close of 70.74 at the interbank foreign exchange (forex) market. Facing immense pressure, it descended sharply to hit a life-time low of 71.00 in early morning deals with no support coming from RBI. It later managed to pull back some part of early losses in mid-afternoon deals, but succumbed to fag-end selloff to end at its historic level of 71, revealing a loss of 26 paise.

‘Re still overvalued, no need to panic’

EVEN as the rupee breached the crucial 71 level plumbing a
new life-time low on Friday, State Bank said one should not
get too much worried about a “little bit of depreciation” as
the currency is still “overvalued.”

The rupee has been the worst among the large emerging market peers, losing over 10 per cent from the beginning of the year. But SBI Managing Director P K Gupta told reporters that the rupee has been faring better than many of its peers, including the Turkish, Argentinean, and Indonesian currencies.

“You need to look at what's happening globally. Argentina, Indonesia. Most of the currencies are losing against the dollar. In fact, the fall of the rupee against the dollar has been much lesser compared to most other currencies,” Gupta said. “I don’t think the value of the rupee is so much of a concern now. The unit is overvalued in any case. A little bit of depreciation should not impact too much at this stage,” he added.