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MUMBAI (Reuters) – The rupee has fallen to a record lows against the US dollar on Thursday in the Asian markets, weakening macroeconomic fundamentals on the home front also weighing on the currency.
The net gain of the dollar overnight and the decline of the Asian peers caused the fall of the first exchanges, said the traders, adding that they hoped that the central bank would intervene to avoid further losses.
The partially convertible rupee is trading at 68.92 / 93 per US dollar at 5:42 GMT, after reaching a life expectancy of 69.0950 earlier in the session, and significantly lower than its previous close of 68.65 / 66.
The last record of the rupee was 68.8650 to the dollar, reached November 24, 2016.
The dollar was, however, stable against its peers on Thursday, failing to prolong its overnight gains from Washington's contradictory signals on a proposal to curtail Chinese investment as fierce competition from the United States kept financial markets.
On the home front, the growing current account deficit (CAO) due to rising world crude oil prices and regular capital outflows weighed on the rupee this year.
The rupee has dropped 7.7% so far this year to its lowest level, making it the worst performing currency of Asia, followed closely by the Philippine peso.
"Weakening at this rate breaks confidence." The markets expect RBI (Reserve Bank of India) to more effectively manage the currency, the pressure on the INR is high, so in the absence of a major action on the part of regulators, 70 levels can be seen, "said the chief of currency trading and debt in a foreign bank.
"The RBI has managed effectively (the rupee) over the years, and they have enough firepower to handle the steep drops."
India's foreign exchange reserves rose to $ 410.07 billion as of June 15, according to the latest data from the central bank.
Oil prices recovered for much of 2018 due to tighter market conditions due to record demand and voluntary supply cuts by the United States Producers' cartel. oil exporting countries (OPEC).
In India, the value of the Canadian dollar widened to $ 13.0 billion, or 1.9% of GDP, compared to $ 2.6 billion, or 0.4% of GDP, relative to the value of the Canadian dollar. Previous year.
Despite the CAD's rise, it remains modest relative to GDP and is largely financed by equity inflows, including foreign direct investment, said Moody's in a note on Thursday, adding that large foreign exchange reserves were a good buffer.
"India's low dependence on foreign currency borrowings to finance its debt limits the risk that the depreciation of the currency will translate into lower debt debt," Moody said. .
Reportage by Swati Bhat; Editing by Subhranshu Sahu
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