Published: Wed, August 15, 2018
Business | By Eloise Houston

Rupee recovers 35 paise after breaching 70/$-mark; falls 10% in 2018

Rupee recovers 35 paise after breaching 70/$-mark; falls 10% in 2018

Amit Chavda said the prime minister had "mocked" former prime minister Manmohan Singh when the rupee depreciated.

Apart from global cues, outflow of foreign funds from the Indian equity and bond markets has had an adverse impact on the rupee. Previously, the rupee had dropped 2.4 per cent or 148 paise in a single day in August 2013.

"A slowing Chinese economy, tightening monetary policy and an escalating trade war are some of the main reasons for this turmoil into currency markets as sentiments towards emerging markets are worsening". However, according to an Economic Times report, Turkish lira, Russian ruble, Argentine peso have significantly weakened against the dollar.

Some currency experts are even predicting that the rupee would slide to 80 per dollar, or Rs21.8 per dirham in the coming months. Traders are now anxious over the Turkish crisis spreading its impact over the world economy. Core inflation eased to 6.1% from 6.4% a month ago.

Similarly, current account deficit (CAD) has reached 5 per cent of Gross Domestic Product (GDP) in Turkey against 2 per cent in India.

Attributing the fall in rupee value against the USA dollar to "external factors", Economic Affairs Secretary Subhash Chandra Garg said on Tuesday that there is nothing to worry about as long as the depreciation is in line with other currencies.

Subhash Chandra Garg, economic affairs secretary at the finance ministry, said the rupee was still performing better than some other currencies and the country had sufficient foreign exchange reserves. "The dollar index has strengthened beyond 96 levels reflecting its safe-haven status due to a possible domino effect of the Turkey crisis on the other financial institutions".

Investors preferred safe-havens such as the US dollar and the yen after a plunge in the Turkish Lira sent all emerging market currencies sharply lower.

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