₹ massacred by 55p to 64.04 against $ on trade deficit worries

Mumbai: Hit by a double whammy of rising global crude prices and worsening trade deficit, the currency market on Tuesday witnessed a volatility with the rupee plummeting to end at a fresh two-week low of 64.04 against the US dollar.

Recording its biggest single-day crash in eight months, the Indian currency on Tuesday lost a whopping 55 paise, or 0.87 per cent, in highly volatile trade.

Overall forex sentiment turned into dismay after the country's trade deficit widened to a three-year high on higher oil and gold imports.

India's exports rose at a healthy pace in December by 12.36 per cent to $27.03 billion, but imports surged significantly to $41.91 billion, up 21.12 per cent, widening trade deficit to $14.88 billion, up about 41 per cent year-on-year. The rupee started on a negative note on Tuesday. The intense volatility pushed the rupee to hit a fresh low of 64.15 in intra-day levels during mid-afternoon after a sense of panic rippled through currency trading floors.

After a breath-taking rally since November last year, the rupee once again turned shaky and bore the wrinkled brunt of immense selling on near-term concern over risk of fiscal slippage due to a sudden spike in global crude prices.

The rising inflation and some speculation that the government may miss its deficit target after international crude oil prices hit $70 a barrel will give less space to the RBI to cut rates in the near term, adding to worries.

The retail inflation accelerated to 5.2 per cent in December last year, though wholesale prices eased to 3.58 per cent in December 2017. On the international commodity front, global crude prices consolidated recent gains at around $70 a barrel on Tuesday, a level not seen since 2014.