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Rupee tumbles below 68 level ends at 9-month low

Mumbai: The rupee on Friday crashed below the psychological 68-mark to end at near nine-month low as sentiment turned bearish on combination of growing US rate hike expectations and stunning dollar run.

Witnessing a near-term rout, the home currency crumbled bya whopping 31 paise to end at 68.13 against the US dollar -the lowest closing since February 29. Imminent higher interest rate environment arising out ofthe US Federal Reserve’s hawkish tone along with heavy capital outflows took a toll on the rupee, a forex dealer said.

Frantic dollar demand from importers and corporates mainly pressurised the home unit, the dealer said. The US Dollar rallied to the highest level in 14 years against all major counterparts after Fed Chair Janet Yellen reiterated that the US interest rates could rise “relatively soon” due to an improving domestic labour market and stronger growth.

Foreign portfolio investors (FPIs) remained net sellersand sold shares worth a net Rs 926 crore today. The domestic currency opened substantially lower at 68from overnight closing level of 67.82 at the Inter bank Foreign Exchange due to strong dollar demand in the wake of sustained foreign capital outflows.

It remained under immense pressure throughout the dayand encountered extreme volatile momentum, plunging to freshintra-day low of 68.19 in late afternoon deals before endingat 68.13, showing a steep loss of 31 paise, or 46 per cent. Last Friday, the rupee had breached the 67 level on hugecapital outflows in line with other emerging markets afterexpectations that Donald Trump’s new administration willincrease fiscal stimulus which could lead to higher interestrates in the US.

The dollar Index was quoted sharply high at 101.11 inafternoon trade today. Meanwhile, RBI on Friday fixed the reference rate for thedollar at 68.0937 and euro at 72.2134. In cross-currency trades, the rupee continued to slide against the pound sterling to finish at 84.66 from 84.55, butrecovered against the euro to settle at 72.37 as compared to72.80 on Thrusday. The home unit also bounced back against the Japaneseyen to close at 61.72 from 62.24 per 100 yens earlier.

PTI