Government attributes rupee fall to external factors, says nothing to worry

Muriel Colon
August 14, 2018

The Indian rupee has depreciated by 10 per cent in 2018.

The rupee settled almost unchanged on Tuesday, after weakening to a fresh all-time low of 71.10 against the U.S. dollar amid prevailing weakness in emerging market currencies.

In the current financial year, which began on April 1, the rupee has depreciated around 6.7% against the U.S. dollar.

The under-pressure rupee touched 70.09 briefly during mid-morning trade as fears grow that the plight of Turkey's lira will spread to other emerging countries.

The ongoing currency turmoil in Turkey has dampened investors' sentiments globally.

The rupee crashed to a fresh lifetime low of 70.09 against the dollar as investors were nervous that the plunge in the lira could prompt capital outflows from other emerging economies that run a hefty current account deficit and rely on foreign capital.

Economic affairs secretary Subhash Chander Garg.

"There is no point spending a lot of dollars in defending a rupee when the force of the fall is so strong across emerging markets", said a senior forex dealer at an Indian state-run bank.
There is "nothing at this stage to worry".

The rupee continues to slide down as it touches the fresh record low of 70.02 against the USA dollar today.

In a ray of hope, however, last month retail inflation fell to a nine-month low of 4.17% on declining vegetable prices.

The currency crisis in Turkey, which had a massive impact on Asian markets on Monday, began after President Recep Tayyip Erdogan asked citizens to exchange gold and dollars into the lira as the country's currency dropped almost 19% due to worsening relations with the United States.

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