Rupee plunges to 73.34, loses 43 paise against US dollar

Delhi: The Indian rupee on Wednesday dropped to a new record low to 73.34, breaching the 73-mark against the US dollar. 
At the Interbank Foreign Exchange (forex) market, the domestic currency dropped 43 paise to 73.34 against the US dollar in the early trade. On Monday, the rupee closed at 72.91. Tuesday markets were closed for Gandhi Jayanti.

Forex dealers said strong demand for the American currency from importers amid rising global oil prices and unabated capital outflows has affected the rupee yet again. 

Brent crude oil futures were trading at $84.89 per barrel at 0222 GMT, up 9 cents from their last close.

Traders are concerned that rising oil prices may lead to a fiscal slippage, increase inflationary pressures and raise prospects of a rate hike by the Reserve Bank of India (RBI) in its October monetary policy review.

Analysts largely expect RBI to raise its repo rate by 25 basis points at its meeting this week, with more increases to come this and next year.

“With crude prices likely to remain (higher), we reiterate our concerns on the Indian macro, especially, on deteriorating external sector balance, upside risks to inflation, risks of fiscal slippage, and INR depreciation,” said Kotak Economic Research report in a 27 September note.

So far this year, the rupee has declined over 12%, while foreign investors have sold $2.01 billion and $7.11 billion in the equity and debt markets, respectively.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.312, down 0.20% from its previous close of 95.507.
 

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