Rs sinks to 71-mark on high crude oil, dollar outflows
Mumbai: The rupee on Friday slumped 26 paise to breach the 71 level against the US dollar for the first time in history due to worsening macro environmental factors and heavy month-end dollar demand from importers.
The domestic unit settled the day with a loss of 26 paise, or 0.37 per cent at its lifetime low of 71.00 to the dollar.
Analysts said the RBI is intervening very selectively to contain volatility while the government seems to be comfortable amid a slide in emerging market currencies.
The opposition Congress blamed the "failed" economic policies of the Narendra Modi government for the depreciation of the rupee to a record low.
However, a report by SBI said that one should not get too much worried about a "little bit of depreciation" as the currency is still "overvalued".
SBI managing director PK Gupta said that the rupee has been faring better than many of its peers, including the Turkish, Argentinean, and Indonesian currencies.
An HDFC Bank report forecast the rupee to trade in the range of 70-71 until March 2019.
The rupee has been the worst among the large emerging market peers, losing over 10 per cent in 2018 so far. The currency fell more than 3.7 per cent in August and over 1.5 per cent this week as high crude oil prices and expectations of US Fed rate hike took a toll on the rupee.
US Federal Reserve Chairman Jerome Powell on Wednesday reiterated the case for continued gradual rate hikes remains strong.
Dealers said uncertain economic cycles, geopolitical worries along with macro headwinds and confusing monetary messages are leaving investors in a deep fog about future exchange rate trends.
Investor rushed to safe bets amid mounting global trade war fears after reports that American President Donald Trump was willing to apply tariffs on $200 billion worth of Chinese goods as soon as next week.