Mumbai: The rupee tumbled for the second straight session to hit a fresh closing low of 68.95, sliding by 21 paise following a panic demand for the US dollar coupled with savage capital flight worries.
Fears over a slowdown in the country's economy in the midst of surging international crude oil prices along with unambiguously hawkish Federal Reserve policies and widening current account deficits predominantly kept the forex sentiment highly nervous.
Suspected RBI intervention, however, hauled the rupee off an intra-day low struck in the mid-afternoon trade and prevented it from touching the psychological 69 level.
After an extraordinarily smooth ride in 2017, the home currency has been on a steady decline since April and crashed to a life-time low of 69.10 on June 28 this year. On July 2, the rupee had hit its life-time closing low of 68.80 a dollar.
The rupee stands out as one of the most vulnerable and worst performing currencies in Asia with an almost 8 per cent fall in the value against the resurgent dollar bull.
The greenback has rallied since new Federal Reserve chairman Jerome Powell delivered upbeat testimony to lawmakers last week.
A sudden outrush of foreign investors triggered by the US Federal Reserve signalling of a tighter monetary policy further complicated the challenges of managing currency markets.
Escalating trade tensions, triggered by tariffs and counter-tariffs too weighed on the trading front. Moreover, traders are also awaiting Fed meeting minutes to be released later in the day.
The government’s announcement to hike minimum support price (MSP) of kharif crops is expected to contribute to inflationary pressures in the economy and that may prompt the central bank to raise interest rates more steeply than expected, a forex dealer said.
