Indian rupee on Thursday touched an all-time low while crossing rupees 69 per USA dollar mark due to what the analysts said high crude oil prices, weak macro-economic fundamentals, and because of heavy month-end demand for the American currency from importers and banks.
"Ekta Batra, a business journalist, says, ".Look at our resilience versus other Emerging Markets since the past 5 years.
The local currency has fallen 8% versus the USA dollar so far this year.
"There is a little bit of panic in the market as we are venturing into new territory", said Kishore Narne, head of commodity and currency at Motilal Oswal Financial Services Ltd.
Another major factor weighing down the rupee is the ongoing trade turmoil between the world's two largest economies, the United States and China, which continues to roil forex market sentiments. Therefore, a depreciation of home currency will increase the price levels in the home country, but cheaper in foreign countries. 87 per dollar. With the rupee testing new lows and the oil scare persisting, RBI Governor Urjit Patel has a tough task with respect to salvaging the falling currency, a task similar to what his predecessor Raghuram Rajan faced in August, 2013, when the rupee had tested a low of 68.85 against the USA dollar.
Collapse of Indian rupee to a lifetime low of 69.10 against the U.S. dollar will not give an extra edge to domestic exporters, but provide a level playing field in global market, FIEO today said.
The broader NSE index was down 0.41 percent at 10,628 as of 0610 GMT while the benchmark BSE index was trading 0.26 percent lower at 35,124.87.
The OPEC announcement made last week, reported fall in crude prices, that have been finding support on lower levels and subsequently keeping currency under pressure. When the yuan slides versus the dollar, it makes it more expensive for the companies to pay back those debts. A weaker rupee may give exports a boost as they become cheaper. The credit ratings agency also singled out Pakistan, Mongolia and Ghana.
Meanwhile, higher gas prices hit Indian consumers at the pump.
"The government, however, believes the situation will not worsen on the economic front and the central bank might put off on any rate hikes".
"For as long as buying the dollar continues to be the trend of the [currency] market, there is very little emerging markets can do to prevent weakness", added Ahmad.