The battered rupee breached the 70 mark against the US dollar for the first time ever on Tuesday. After posting its weakest ever loss of Rs. 1.09 against the US dollar on Monday, the rupee strengthened by 23 paise in early trade on Tuesday.
However, at about 10:30 am, the rupee hit an all-time low of 70.1 per dollar and extended it to 70.09, as concerns about Turkey's economic woes persisted. Analysts expect the rupee to fall further to below 70 per dollar.
In yet another attack on Prime Minister Narendra Modi, Congress chief Rahul Gandhi on Tuesday said that the national currency has given a ''no confidence to the Supreme Leader'', hours after Rupee plunged to 70.08 - the lowest-ever - against the mighty US Dollar.
The Congress chief took to Twitter and tweeted, ''The Indian #Rupee just gave the Supreme Leader, a vote of NO confidence, crashing to a historic low. Listen to the Supreme Leader's master class on economics in this video, where he explains why the Rupee is tanking.''
The remarks from the Congress president came after the Indian Rupee crashed to a historic new low against the mighty US dollar on Tuesday amid fears over a rise in global protectionist measures, along with a strong US economy.
The Rupee, however, recovered by a fraction at Rs 69.98. Around 11 am, the rupee plunged to 70.08 - lowest-ever - against the greenback.
However, soon afterwards, the Reserve Bank of India (RBI) reportedly intervened to curb the decline in rupee.
The intervention aided the rupee to stabilise just a tad below 70 to a USD at 69.98 around 11.05 am.
"The fear of a rise in global protectionist measures along with a strong US economy pulled the Indian rupee lower to 70.08 during intra-day," said Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities.
Banerjee predicted an immediate range from Rs 69 to Rs 71 per US dollar. At 1.40 pm, the rupee stood at 69.855 to a US dollar.
The government, on its part, blamed "external factors" for the rupee's fall to an all-time low against the US dollar and said there is nothing to worry.
Economic Affairs Secretary Subhash Chander Garg said external factors may ease going forward.
"Rupee is depreciating due to external factors," he said. There is "nothing at this stage to worry," he added.Here are 10 things to know about rupee's crash on Tuesday:
- The rupee crashed to all-time low of 70.09 against the US dollar, reported news agency Press Trust of India.
- However, economic affairs secretary Subhash Chander Garg said later that the fall in rupee was due to external factors and there was no need to worry at this stage."As currencies of other economies are also depreciating, intervention by the Reserve Bank of India (RBI), by selling dollars in the country, will not help much at this stage for stabilising the rupee. Even if the rupee falls to 80, it will not be a concern provided all other currencies depreciate," he was quoted as saying in a Reuters report.
- The 10-year benchmark bond yield inched up to 7.82 per cent after staying muted in early trade.
- "Panic demand of dollars from importers and strength in the dollar index pulled the rupee today. Also, intervention from Reserve Bank of India (RBI) is very limited in the forex market," said Rushabh Maru, Research Analyst, Anand Rathi Share and Stock Brokers.
- In early trade, the rupee traded at 69.68 against the US dollar after retail inflation fell to 9-month low of 4.17 per cent in July on declining vegetable prices which may prompt the RBI to pause interest rate hike in its next monetary policy review.
- "Given the prevailing risk aversion in the global markets, we don't rule out that the rupee will briefly cross 70/dollar before retracing to 69/dollar levels," said Aditi Nayar, principal economist at credit ratings agency ICRA.
- The falling rupee, which has so far lost over 8 per cent this year, has pushed up prices of imported items such as petroleum products, commodities, electronics and engineering equipment.
- The Turkish lira has weakened 45 per cent against the dollar this year.
- Analysts say the crisis has been a long time coming and reflects Turkey's refusal to raise interest rates to curb double-digit inflation and cool an overheated economy. President Tayyip Erdogan has said that Turkey is the target of an economic war, denying that economic fundamentals were behind the lira weakness.
- Meanwhile, a weaker rupee strengthened IT stocks. All 10 stocks of the Nifty IT index traded in the green at 11:24 am. The Sensex traded at 37,799.66, up 154.76 points or 0.41 per cent and the Nifty50 was at 11,408.40, with a gain of 52.65 points or 0.46 per cent.