Rupee plummets to 73.77 a dollar as oil, dollar gains strength
04 October 2018
The rupee plummeted to a fresh low of 73.77 against the US dollar today, pummeled by rising oil prices and a strong dollar propped up by a higher interest rate regime by the US Federal reserve/
The rupee which has been in the doldrums over the past few months, hit a series of record lows against the dollar in the past two months, losing more than 13 per cent of its value so far this year.
It is also the worst-performing Asian currency, besides Indonesian rupiah and Philippine peso.
The rupee was hammered by persistent dollar demand from importers, mainly oil refiners, following higher crude oil prices.
At the interbank foreign exchange, the rupee opened lower and slipped further to a fresh low of 73.77 against the US currency down 43 paise from the previous close of 73.34 a dollar.
The Indian rupee fell further as surging oil prices and widening current account deficit continued to weigh on sentiment.
The international benchmark Brent crude breached the $86 per barrel level, nearly its four-year high.
Oil prices firmed near the highest level in almost four years on expectations of a tighter market once US sanctions on Iran are effective next month.
Traders remained cautious as the Reserve Bank of India’s monetary policy committee is expected to raise rates by 25 basis points on Friday, the third time this year, amid a higher crude and the weakening rupee.
Earlier in the week, the central bank said announced plans to infuse Rs36,000 crore via bond purchases this month to meet the festive season demand for funds. The auctions to purchase government bonds as part of the open market operations will be conducted in the second, third and fourth week of October.
Tracking the currency’s weakness, bond yields rose 6 basis points to 8.06 per cent from its previous close of 7.99 per cent.