Mumbai : The embattled rupee plummeted 24 paise against the US dollar to end at a new record low of 72.69, due to a rebound in crude oil prices and capital outflows amid intensifying global trade war concerns. The rupee had a positive start and touched a high of 72.25 versus the dollar in early morning deals. But, it suddenly collapsed to hit a fresh record low of 72.74. However, the swift RBI intervention led to some recovery. Any policy response other than the RBI’s intervention, will depend upon the strength of the sell-off in key emerging markets and contagion risk, currency dealers said.
The rupee is the latest currency to be dragged down by fears that an escalating trade war could hurt global growth and severely affect Asian economies. The spillover from the emerging-market turmoil in the Argentina peso and Turkish lira is largely weighing on Asia currencies. Besides, a massive portfolio liquidation pressure from foreign investors and some political uncertainty about 2019 general elections have also been acting as a dampener on forex market sentiments, the dealers said. Foreign investors withdrew close to Rs 2,300 crore from the capital markets since Monday, according to provisional data. Surging global crude prices also added pressure point in Tuesday’s trade after the benchmark Brent breached the $78-mark once again. India’s benchmark 10-year sovereign yield jumped to end at a fresh four-year high of 8.18 per cent.
Meanwhile, the US dollar has been extending gains over the past week on the back of a strong jobs report and expectations of a rate hike from the Federal Reserve this month.
At the inter-bank foreign exchange (forex) market, the rupee resumed higher at 72.30 from overnight finish of 72.45 on the back of adequate dollar liquidity.