Mumbai: The Indian rupee on Monday crashed to yet another historic low of 71.21, losing 21 paise at the close against the US dollar as nagging concerns over rising crude oil prices and trade war tensions continued to hurt forex market sentiment.
It was a virtual collapse for the Indian unit during the late afternoon session despite a strong start as investors hit the panic button and even government’s efforts to calm investor nerves failed to yield any result.
A sharp rally in global crude prices further dampened the overall trading mood. Benchmark Brent crude oil was trading at USD 78 a barrel. The domestic currency opened with strong gains largely helped by weekend robust macro numbers also some technical bounces after recent record fall. However, overall forex market sentiment suffered a sudden reversal of fortune contrary to expectation largely moving in line with local equities, reversing all early strong gains.
India’s economy grew at a delightful 8.2 per cent rate in April-June this year after the twin shocks of cash ban in 2016 and the chaotic introduction the GST last year, reclaiming its position as the fastest growing major global economy this year.
The central bank has recently pulled several moves to support its currency including its foreign cash reserves along with raising its interest rate twice with the last in August to pre-empt any fresh bout of currency rout as the global trade war escalates.
Heightened risk associated with the swelling current account deficit against the grim backdrop of surging global crude prices and global turmoil have all contributed to excess volatility on the trading front. (PTI)
