Indian rupee hits record low

Published
57

MUMBAI: The Indian rupee fell to a record low of 68.8650 on Thursday, pressured by a rallying US dollar, capital outflows from emerging markets, and worries about the country’s demonetisation drive.

Despite repeated interventions by the central bank to slow the slide, the rupee breached its previous low of 68.85 to the dollar hit in August 2013, when India was mired in its worst currency crisis in more than two decades.

The Reserve Bank of India intervened again in the afternoon, after spending around $500 million in the morning, eventually pushing the rupee to a close of 68.73, down from its 68.58 close on Wednesday.

A government spokesman attributed the rupee’s falls to the recent slide in emerging market currencies, which has also seen the yuan hit 8-1/2 year lows.

The rupee has fallen around 3 per cent this month, its biggest fall against the dollar since August 2015, though it has fared better than many other emerging market currencies since Donald Trump’s shock win in the US presidential election.

Analysts said they expected the rupee to remain under pressure, with a fall to as much as 70 in the near-term, depending on global conditions.

“This is a dollar strength story and we need to depreciate against developing markets to maintain the competitiveness of the exchange rate,” said Ashish Vaidya, head of trading at DBS Bank in Mumbai, the financial capital.

“The RBI has not been protecting any particular level, but has been containing volatility.” In 2013, pressure on the current account triggered heavy rupee selling, but this time India is seen as being far better positioned to resist outflows from investors attracted by higher US interest rates.

Expectations that President-elect Trump will pursue an expansionary fiscal policy that will drive inflation higher and lead to higher US interest rates are behind rising US yields that have attracted investors to the dollar.

Published in Dawn, November 25th, 2016

Follow Dawn Business on X, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Fixing bond markets
Updated 01 Oct, 2026

Fixing bond markets

Pension funds, insurance companies, mutual funds, retail investors, and eventually, foreign investors must become bigger participants in the market.
Call centre rackets
01 Oct, 2026

Call centre rackets

A NUMBER of recent raids conducted by the authorities in different cities point to the growing threat fraudulent ...
Homeward bound
01 Oct, 2026

Homeward bound

FIVE months after Somali pirates captured an oil tanker carrying a 19-member multinational crew, Somali maritime...
Kashmir unresolved
Updated 30 Sep, 2026

Kashmir unresolved

The just solution lies in India addressing the issue through a trilateral dialogue involving the legitimate representatives of the Kashmiri people and Pakistan.
Water shortage
30 Sep, 2026

Water shortage

THAT the country is entering the Rabi season with an anticipated water shortage of nearly 25pc, the lowest carryover...
Young hearts
30 Sep, 2026

Young hearts

THE observance may have passed, but the message of World Heart Day should not fade with it. The occasion is a useful...