Rupee skids on oil to 19-month low
The spike in global crude oil prices could also hurt India's current account deficit and stoke domestic inflation.
Mumbai: Rupee fell to a 19-month low against the US dollar on Wednesday as higher oil prices and growing concern regarding trade war impacted investor sentiments towards emerging market currencies. The spike in global crude oil prices could also hurt India’s current account deficit and stoke domestic inflation.
After opening the day at 68.42 a dollar, the local currency hit an intra-day low of 68.67 – a level last seen on November 30, 2016 before closing the session at 68.63 a dollar, just 19 paise away from its all-time closing low of 68.82 a dollar.
With global factors remaining unfavourable, experts are not ruling out the possibility of the rupee breaching the 70 level mark against the dollar in the coming days. “We believe that the RBI may intervene aggressively around 68.80—68.85 levels to defend the currency. But if 68.86 level is taken out then we may see sharp depreciation in the rupee in coming sessions and it may move towards 70.00-70.50 levels immediately,” said Rushabh Maru, research analyst, Anand Rathi Commodities.
According to him, rising crude prices, trade war concerns, strength in the dollar index and weakness in the emerging market currencies are key factors for the rupee depreciation.
Steady capital outflows and worsening domestic macroeconomic fundamentals are also key factors for the depreciation.