Rupee set to slide to 75 per dollar, say lenders

Mae Love
September 11, 2018

The Indian currency has continued its weak run with the rupee opening at a new low of 72.15 against U.S. dollar on the Interbank Foreign Exchange (Forex) market on Monday, down from a close of 71.72 on Friday.

The Indian rupee breached 72.50 level against the USA dollar for the first time ever on Monday and hit an all-time low of 72.67, down 94 paise from its previous close of 71.73 level to the dollar.

The local currency hit another record on Monday after data showed that India's current-account deficit widened to the most in five years. The rupee has depreciated 13 per cent so far this year against the dollar.

The rupee ended weak at 72.45 due to rising crude oil prices, strengthening of dollar against other currencies overseas on upbeat jobs data and widening of current account deficit.

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Forex dealers said besides strong demand for the American currency, buying by importers, mainly oil refiners in view of surging crude oil prices and capital outflows, weighed on the domestic currency.

On suggestions of NRI bonds to check rupee depreciation against the USA dollar, Rajan remained non-committal, but said they are "weapons you have in the armoury".

The report noted that the finance ministry and the Reserve Bank of India are in touch and that there is a constant intervention of the central bank in the currency market as and when the need arises.

However, of the 24 Moody's-rated India-based corporates across the high-yield and investment-grade categories, 12 generate most of their revenue in United States dollars or have contracts priced in the greenback, providing a natural hedge, and thus limiting the effect a weakening in the rupee could have on their cash flows, it said.

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