Home >Market >Stock-market-news >Rupee closes at fresh record low of 71.76 vs the dollar

Mumbai: The rupee today plummeted further against the US dollar on concerns of contagion from other emerging markets. During the day, it hit a fresh low of 71.97 a dollar but recovered mildly on the intervention from Reserve Bank of India, Reuters reported. The rupee ended at 71.76 a dollar, down 0.27% from Tuesday’s close of 71.57. It opened at 71.45 per dollar. This is the sixth consecutive session when the currency fell.

Emerging markets received more bad news as South Africa’s economy slumped into recession on Tuesday, a day after Turkey reported a surge in inflation. Philippines announced Wednesday that inflation exceeded 6% for the first time since 2009.

Traders turned worried after US manufacturing report that boosted the odds of further Federal Reserve rate increases.

“A deteriorating EM risk backdrop and pressure on current account deficit currencies has led rupee vs dollar to multi-year highs. We see risk of continued rupee depreciation in the near term and enter a short-dated long rupee vs dollar call spread position", said Nomura Research in a recent report.

“Local factors for depreciation include limited intervention by the Reserve Bank of India (RBI) and limited concerns, in our view, over FX depreciation (watch this space), a lack of urgency to hike rates, rising political risks, and a large trade deficit with a higher oil price and portfolio outflows", Nomura report added.

Bond yield erased gains first time after seven sessions. The 10-year bond yield settled at 8.049%, from its previous close of 8.063%. Bond yields and prices move in opposite directions.

So far this year, the rupee has weakened 11%, while foreign investors have sold $488.60 million and $5.75 billion in equity and debt markets, respectively.

The benchmark Sensex fell 0.59% or 224.16 points to 37,933.76 today. Since January, it has gained 13.47%.

Bloomberg contributed this story.

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