The Indian rupee breached the 71 mark for the first time in the morning trade Friday. It has opened at a fresh record low of 70.95 per dollar versus previous close 70.74.
Yesterday the rupee ended at fresh life time low of 70.74 the dollar due to month-end demand for the US currency from importers and rising crude oil prices.
However, during the day the rupee slipped to a record low of 70.90 to a dollar.
VK Sharma, Head Private Client Group & Capital Market Strategy at HDFC Securities said, “Indian Rupee has depreciated around 11% year to date. Higher crude oil prices, demand from defense and oil marketing firms have contributed to the latest bout of weakness."
"Rupee was overvalued on trade weighted real effective exchange rate. We are not overly concerned about the rupee beyond 72 level. Robust FDI flows in e-commerce companies, healthy forex reserves may limit the downside of the rupee,” he added.
On Thursday, rupee fell to fresh record low levels of 70.80 in the intraday session. The currency in the last few sessions has come under pressure following dollar demand by oil marketing companies and defence related buying. Apart from domestic dollar demand, weakness in Asian currencies also weighed on the rupee, said Motilal Oswal.
Yesterday, Turkish Lira fell by over 5% as resignation of the deputy central bank governor intensified market concerns over the direction of monetary policy. On the other hand, Argentina Peso fell after its central bank raised rates to 60% as it struggles to repay heavy government borrowing.
For the day, rupee is expected to quote in the range of 71 and 71.50 (Sept), it added.
Emerging market currencies are under pressure as the Argentine Peso (ARS) and Turkish Lira (TRY) have weakened significantly. The request by the Argentine government to the IMF for early release of USD 50bn loan started the downslide in the Argentine Peso. The Turkish Lira too crashed 5% on chatter that the deputy governor of Turkish Central Bank could resign, as per IFA Global currency report.
There was selling by nationalized banks yesterday around 70.80 and we could see that happen today as well.
Indian Rupee plunged to all-time low of 71 levels in the early trading session as crude oil prices continued to inch high and again trades above USD 70 mark. So far, the local unit has fallen by more than 3.5% in the current month on account of weakness in the peer currencies and concerns over widening trade and current account deficit, report further said,