The Indian Rupee slides down to hit new low.
When ever we have had to compare the Indian rupee to the US dollar, we approximated and rounded off one dollar to sixty rupees. But that amount has increased.
The rupee could not prevent the landslide and on Thursday, its value went down to an all-time low of 70.32 against the US dollar. There was a plunge of 43 paise against the US dollar in opening trade.
It hit a record low in foreign exchange and hit a record low of 70.25 a dollar. This is lower than the previous year’s 69.89 a dollar. It later weakened further and hit 70.32.
Investor sentiment was affected this widening trade deficit. On one hand, the domestic rupee was going down and on the other hand the US currency was rising up. India’s trade deficit widened to a more-than-five-year-high $18.02 billion in July. This was announced the trade ministry on Tuesday. This was driven a surge in oil imports.
Markets across the world have been hit hard. Investors are acting cautiously regarding the spread of the currency route in Turkish lira. Emerging markets like India, Russia, South Africa and China have been affected significantly. This is partly due to investors shifting towards the safe shade of the US dollar.
“The trade deficit is the major trigger for today’s fall in the rupee. Even though the Turkish lira has recovered, the dollar index continues to move higher. The rupee will recover when global market stabilizes. I think, the rupee will remain under pressure in the next few sessions,” said Rushabh Maru, Research Analyst, Anand Rathi Share and Stock Brokers. Even if the rupee appreciates, the appreciation would not sustain for long due to global uncertainty, Mr Maru added.
The global market seems grim when considering an appreciation in the Indian rupee. Will this lead to more instabilities in the global market?
