Indian currency slipped to 68.50 against the US dollar

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rupee 24indianews
The rupee slipped to 68.50 against the US dollar today as the Indian currency continues to get hammered amid the greenback's rising strength and outflows from Indian stock markets. This is the lowest value of the rupee since February this year. The rupee had recorded its lowest value of 68.85 against the dollar in August 2013 amid concerns over US Fed rate hike and India's high current account deficit. Here are the key highlights: 1) The rupee has been hurt by the twin forces of selling of Indian stocks by foreign investors and the dollar's broad rise against other global currencies since Donald Trump's shock victory earlier this month. The rupee has fallen over 2 per cent since November 9, as the dollar has rallied to 14-year highs against a basket of six major global currencies. 2) Trump's victory has fuelled expectations that inflation would rise in the US if the president-elect follows through on a pledge to spend big on infrastructure and cut taxes. Strong US economic data has also fuelled expectations of a rate hike from US Federal Reserve next month. Federal Reserve Chair Janet Yellen last week signalled that the central bank was on track to raise interest rates soon. 3) This has driven US bond yields sharply higher, making dollar assets attractive. This has led to a major re-pricing of assets, with investors rushing to buy US stocks and the dollar, while dumping emerging market assets. 4) Foreign investors have sold Indian stocks worth over Rs 12,000 crore since November 8, putting further pressure on the rupee. Indian stock markets have also seen a selloff following demonetisation of high currency notes. Many brokerages have revised downward their GDP growth forecast, fearing hit to the Indian economy in the near term. 5) Analysts expect the weakness in the rupee to continue in the near term. TS Harihar, founder of HRBV Client Solutions, expects the rupee to soon break its all-time lows. He sees the rupee eventually touching 70 against the US dollar. "This time around we could see the previous low getting breached decisively and the rupee could get closer to the 70 mark," he said.

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