Rupee slumps to nine-month low
Other | Photo Credit: Reuters

The rupee today 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 by a 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 of the 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 sellers and sold shares worth a net Rs 926 crore today.

The domestic currency opened substantially lower at 68 from overnight closing level of 67.82 at the Interbank Foreign Exchange due to strong dollar demand in the wake of sustained foreign capital outflows.

It remained under immense pressure throughout the day and encountered extreme volatile momentum, plunging to fresh intra-day low of 68.19 in late afternoon deals before ending at 68.13, showing a steep loss of 31 paise, or 46 per cent.

Last Friday, the rupee had breached the 67 level on huge capital outflows in line with other emerging markets after expectations that Donald Trump’s new administration will increase fiscal stimulus which could lead to higher interest rates in the US.

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