The Indian currency is seeing a steep fall since the beginning of 2018. The rupee has lost nearly 3% of its value since the start of 2018, and it is the second-biggest loser in the BRICS group: Brazil, Russia, India, China, and South Africa.
The rupee, which strengthened 5.96% against the US dollar last year, has been on a downtrend since the start of 2018.
The Indian rupee recovered marginally from its lifetime low to trade at 68.95 per dollar in late morning deals on Thursday. The dollar’s sharp gain overnight coupled with falls in Asian peers caused the drop in early trade, traders said, adding they were hopeful the central bank would step in to prevent further losses.
The rupee’s last record low was 68.8650 per dollar, hit on November 24, 2016.
“Weakening at this pace shatters confidence. Markets expect RBI (Reserve bank of India) to manage the currency more effectively. The pressure on INR is high, thus in the absence of major action from regulators, 70 levels can be seen,” the head of currency and debt trading at a foreign bank said. “The RBI has been effectively managing (the rupee) over the years, and they do have ample firepower to manage sharp falls.”
Oil prices have been soaring too high in 2018 due to record demand and voluntary supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC). Rising crude oil prices weighed heavily against rupee’s value against USD.
The trade war has also been increasing the tensions among the markets.
Meanwhile, the RBI fixed the reference rate for the dollar at 68.5246 and for the euro at 79.8654. The dollar index, which measures the greenback’s value against a basket of six major currencies, was up at 94.69