SME Times News Bureau | 14 Aug, 2018
Continuing its downward journey, the Indian rupee hit a
fresh intra-day low of over 70 against a US dollar during the pre-afternoon
hours on Tuesday.
Around 11.00 a.m., the rupee plunged to 70.08 to a US dollar. However, soon
afterward the Reserve Bank of India (RBI) is said to have intervened in the
open market to curb the rupee's free fall.
The intervention aided the rupee stabilise just a tad below 70 to a USD at
69.98 around 11.05 a.m.
On Monday, global protectionist measures, along with the
outflow of foreign funds, weakened the Indian rupee to its record low of 69.94
per dollar, weaker by Rs 1.11 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."