Rupee hits record low at 71.56 against US dollar; Sensex drops below 330 points

The Indian currency Rupee, has reached a record low and ended 71.56 against US dollar. The increase in global oil price and risk from emerging economies has pushed the rupee to such a low.

On Monday, rupee depreciated 30% or 21 paise. For the first time in four years, the yield on 10 year benchmark bod closed above 8% too.  Kotak Securities, Currency strategist Anindya Banerjee said, “The fall in rupee is manly to the global factors like higher oil prices and also there was large scale outflow from the equity and bond market,” as quoted in The Hindu. He also said that there is added pressure on the rupee because at present there is no activity per-say in the off-shore markets.

Mr Banerjee further added, “Weakening of some other currencies like Lira also added to the pressure. Now that every week the rupee is hitting all time low, so speculators are quite emboldened which are mainly happening in the off shore market, which the RBI can do nothing about.”

The Rupee has become one of the worst performers in Asia because of its continuous downward trend past few weeks. It has depreciated close to 11% in this financial year. Even the foreign exchange reserves is not far behind from this falling stride. It fell about $26 billion this year, since its peaking in April.

Anindya Banerjee said, “It may head to the levels of 72 in a couple of weeks, unless we see a dramatic turnaround in the emerging market currencies, which is unlikely.”

Sell off int he last hour of trade erased all gains for the equity indices with the BSE Sensex fell over 332.55 points or 0.86% to end at 38,312.52 and the NSE Nifty dipped below the 11,600-level by losing 98.15 points to close at 11,582.35.

Also read: Stock market update: Sensex rises over 100, Nifty retrieves 11,700; ends on a weak note