Mumbai: The Indian rupee touched 80 per US dollar for the first time ever on Tuesday after opening at 79.99 per dollar. The rupee declined for the eighth consecutive session after crude oil surged on concerns about tighter supplies globally.
On Tuesday, the rupee fell to 80.06 per dollar. The currency has been hit by foreign outflows of about $30 billion from the country’s equities so far this year – a record amount – and concerns over a worsening of the current account deficit amid high oil and commodity prices.
India’s policymakers have sought to contain the currency’s depreciation with a range of measures – from interventions to raising duties on gold imports – with the rupee weakening under imported inflationary pressures. Other emerging market currencies are also feeling the heat as the Federal Reserve increasingly pulls capital to the US.
According to a Bloomberg survey, the currency has declined 7% this year as India’s current account deficit – the largest measure of external finance – is likely to 2.9% of gross domestic product in the fiscal year ending March 31, according to a Bloomberg survey in late June, nearly double the level seen in the previous year.
Governor Shaktikanta Das said earlier this month that India’s central bank is looking for gradual increases or depreciation in the currency and is intervening in all market sectors to contain volatility.
Strategists at Nomura Holdings Inc and Morgan Stanley continue to be bearish on the rupee, predicting that the currency may fall to $82 by September.
The Reserve Bank of India has foreign-exchange reserves of almost $600 billion, which it has been deploying to protect the rupee. Authorities have raised duties on gold import and raised levies on petroleum exports. The monetary authority has also announced measures to draw more forex inflows into the country and allowed rupee settlement of trade.
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