Mumbai : The rupee on Wednesday crashed by a staggering 49 paise or 0.70 per cent to close at a historic low of 70.59 against the US currency due to strong month-end dollar demand from oil importers and foreign fund outflows.
It was the biggest single-day crash since August 13 when the unit crumbled 110 paise or 1.6 per cent. The rupee previously had closed at a record low of 70.16 to the dollar on Monday.
The slide was triggered by factors like crude prices hitting multi-month highs fuelled by supply shocks along with concerns over widening current account deficit (CAD). The Indian currency collapsed to another record low of 70.65 during the day as investors finally hit the panic button after reports highlighted risks of India breaching the 3.3 per cent fiscal deficit target for 2018/19. Traders also reported hedging-related offtake as importers rushed to pay forward premium.
Currency to hover around 68-70: DEA
The government on Wednesday said the rupee was likely to remain in the range of 68-70 to the dollar.
“There is some small mismatch in demand and supply which plays one way or the other depending upon the view that operators take. But some changes have happened which are material. Foreign portfolio investors took out $9 billion from the country in the first three months,” Economic Affairs Secretary S C Garg said while replying to queries on rupee value.
In July, he said the net flow was same so there was no inflow or outflow of money. So far in this month there is a positive inflow of over $1 billion.