Millennium Post

Rs crashes by yet another 72p to hit record closing low of 72.45 per $

Mumbai: The rupee Monday crashed below the 72-mark to end at a life-low of 72.45 against the US dollar on growing fears of contagion from an emerging-market rout and escalation of global trade war.

Heavy speculative dollar demand along with panic among importers sent the domestic currency tumbling by a sharp 94 paise to hit a historic low of 72.67 in mid-morning trade, triggering the central bank intervention to defend the currency.

It finished the day 72 paise lower against the American currency - its biggest one-day crash since August 13.

After a short-lived recovery, forex market sentiment once again turned volatile after US President Donald Trump decided to raise the economic and financial stakes of the global trade war on Friday.

Adding to the fundamental stress, Trump also announced that the US administration was considering another $267 billion in tariffs on Chinese imports.

The rupee had recovered on Friday to close 26 paise higher after a seven straight-day decline.

Widespread concerns about the country's growing trade deficit as well as short-term debt liabilities and protectionist tendencies on the global front largely weighed on forex front, currency dealers said.

Besides, rising oil prices and the weakening currency have already impacted the sentiment here.

India's current account deficit (CAD) as a percentage of GDP declined marginally to 2.4 per cent in the April-June quarter of 2018-19 against 2.5 per cent in the year-ago.

Strong portfolio outflows along side RBI's dollar sales to contain sharp rupee depreciation, resulted in depletion of foreign exchange (forex) reserves to $400.101 billion in the week to August 31, a RBI data showed.

India's biggest jump in foreign-exchange reserves in the last few years helped the nation to support the rupee.

India's benchmark 10-year sovereign yield plunged 13 basis points to 8.16 per cent.

Emerging market currencies and global stocks slumped as the dampened sentiments gripped the markets.

Crude prices rose as investors anticipated lower supply once the new US sanctions against Iran's crude exports kick in from November.

Benchmark Brent crude oil was up $77.22 a barrel in early Asian trade. The country registered a robust 8.2 per cent growth in the April to June quarter.

Next Story
Share it