Mumbai: The Indian Rupee nose-dived through the 72 mark against the greenback.
At 72.10, against the USD, the Rupee on Thursday made it's worst ever performance in intra-day trading.
With the US Dollar easing in global markets, the local currency fell to 72.05 at 12:45 PM (IST). The Rupee had nosedived to 72.10 per dollar a few minutes before updating the story.
The Rupee has declined by 12% in the year so far, and has been reported as one among the weaker performing currencies of emerging economies.
On Wednesday, there were reports that the Reserve Bank of India may have sold Dollars in the morning session to prevent the Rupee from breaching the 72 mark. In the morning session, the rupee traded at 71.65 before closing to 71.75 per dollar at the interbank foreign exchange market.
Most economists said that the Rupee's depreciation was long overdue, keeping in mind the trends in Non-Deliverable Forward markets.
According to a research note from Kotak Securities, the Rupee's woes seem far from over.
In the note, analysts from Kotak reasoned that with several global risks persisting and domestic fundamentals deteriorating, the USD-INR has been forecast to be in the range of 69-74 for the remainder of FY2019.
But, the analysts also believe that INR may stabilize at around 70-72 after "bouts of overshooting".
"If the one-way rapid fall in INR was to continue, the RBI's FX reserves may not suffice to stem the fall. We believe that the RBI could explore few exceptional measures to manage the fall in INR," said Kotak's analysts.
The Rupee's slide has been a cause of worry for importers, students keen to pursue foreign education and the overall economy that depends on imports, majorly for crude oil supplies.
India imports approximately 83% of its crude oil requirement.
Finance Minister Arun Jaitley in an official comment on Wednesday said that the fall in rupee was owing to global factors.
He also reasoned that there was no need to panic or respond with knee-jerk reactions. He assured that the Reserve Bank was dealing with necessary policy interventions on the situation, but did not divulge details.
With crude rallying on speculations of shrinking supplies from Iran, India's crude import bill has already surged by a whopping 76% in July from a year ago to $10.2 billion.
Trade deficit has already ballooned to $18 billion, a five year high, according to a Bloomberg report.
For many Indians, costlier petrol and diesel has been too draining, and this will be a major cause of concern for policy-makers with barely a year to go for the elections in the country.
Here are some reactions from Twitter:
Currency check:— Saloni Dhanuka (@dhanuka_saloni) September 6, 2018
Rupee at record closing low for 6th straight session 71.75/$
10yr bond yield at 8.05%, rose to 8.09% intraday-highest since Dec 2014
USDINR NDF 71.67/$ (flat to positive opening)@FinMinIndia says global factors behind rupee fall, no need for knee-jerk reaction
@arunjaitley— Lucky Singh (@LuckyRoyal99) September 5, 2018
I agree that prices of crude aren't stable, they goes up/down. When they goes up, prices of oil also increases but when crude was at record low last year, why prices of oil was not decreased significantly.
We know well which corporate house got benefitted#Rupee