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The rupee has collapsed to an all-time low as a resurgence of crude oil prices and the liquidation of emerging markets has taken a toll on the currency.
The Indian currency weakened to 68.9100 per dollar on Thursday after its previous record of 68.8650 reached in November 2016.
Brent's sustained gains since mid-2017 have led to a widening of India's current and fiscal deficits at a time when global funds have become selective about investing in emerging markets. The Asian nation imports about two-thirds of its fuel requirements, making it one of the most vulnerable regions in the region to progress in oil prices.
"Given India's current account deficit, it is necessary to finance it, but we are on track for a fifth consecutive month of bond outflows and the stock market is also experiencing exits" said Khoon Goh. New Zealand Banking Group Ltd. in Singapore. Without recovery, the rupee could lose $ 70 to the dollar, he added.
Foreign funds reduced holdings of government and corporate bonds denominated in rupees by $ 6.1 billion and pulled $ 785 million from the beginning of 2018.
Withdrawals have helped make the rupee the worst country in Asia.
India's badets are caught in an infernal spiral, where capital outflows affect the currency, further discouraging investment. Concerns over government debt sales and the impact of higher crude oil prices on inflation led to a sell-off of bonds as investors also pull out of emerging markets because of returns. higher Treasury.
Every $ 10 increase in the price of oil worsens India's current account balance by 0.4% of GDP and pushes up inflation by 30 to 40 basis points, according to Nomura Holdings Inc.
Crude oil has won this week as the United States is pressuring its allies to stop their purchases of Iranian supplies.
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