New DelhI: The Indian rupee on Tuesday slumped to its record low at 70 to the US dollar, significantly weaker from its previous close of 68.83 per greenback.
"Turkish lira plunged another 7 per cent today and that caused a chaos in the emerging market space, with South African rand depreciating by almost 10 per cent. Dollar-Rupee could not withstand that pressure," Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, said.
"Over the near term, trend of USD/INR will be dictated by Turkish lira and Euro/USD. Technically, as long as the pair holds above 69 on spot, trend remains upward. Resistance around 70 and then between 71.50/72 on spot."
Banerjee predicted an immediate range from Rs 69 to Rs 71 per US dollar.
Recent US-imposed sanctions and tariffs on Turkey have had an impact on its currency.
Apart from global cues, outflow of foreign funds from the Indian equity and bond markets has had an adverse impact on the rupee.
Investment-wise, provisional data with exchanges showed that foreign institutional investors sold scrip worth Rs 971.86 crore on Monday.
"Fears of outflows from Indian equity and debt markets led to a panic sell-off. However, July CPI coming in at 4.17 per cent will relieve some pressure on interest rates and the rupee in the near term," said Deepak Jasani, Head of Retail Research at HDFC Securities.
"Further rise in crude prices or fresh trouble in the emerging markets, Euro area could result in risk-off sentiments setting in resulting in a fresh round of weakness for emerging market currencies including India despite intermittent RBI intervention from time to time."
#Rupee notes (contd)— Ajit Ranade (@ajit_ranade) August 14, 2018
7. hence depreciation inevitable
8. besides 20% REER gain is a TAX on exporters
9. On domestic industry too competing w/ imports
10. w/ Lira down 70% this yr, ZAR too
11. rupee cannot be immune from contagion
12. so this fall is ok makes ₹ competitive