The Indian rupee goes on to hit a fresh record low today. It touched a level of 74.35 per dollar following opening higher at 73.87 per dollar on Tuesday.
In the last one year, the Indian currency has fallen more than 16 percent. In 2018 itself the rupee has fallen from a high point of 63.24/USD to all-time low of 74.35/USD today.
Experts opined that although witnessing a stronger opening at 73.87/USD, the Indian rupee fell over US dollar due to rising crude prices along with other factors. The Indian rupee dropped to a fresh record low in the afternoon trade and never really recovered from such low after that.
This is the first time that the domestic currency had settled below the 74 on Monday.
The rupee was struck by a severe setback after the Reserve Bank of India reiterated on Friday that inflation management remains its only policy objective and policy
action will not be based on supporting the currency.
According to media report increasing oil prices and rising current account deficit have been the major factors behind this rupee sliding.
Madhavi Arora, Economist, FX & Rates, Edelweiss Securities as quoted by The Economic Times said, “RBI’s stance on currency comes at a time with other peers Asian emerging markets (primarily Indonesia and Philippines) are actively pursuing interest rate defense for attractive interest rate arbitrage to help keep their currencies afloat. However, not all are on the same boat. China has chosen to keep liquidity abundant back home, as it cut RRR by 100 bps over the weekend to support fragile growth amid slowing exports.”