The Reserve Bank of India's battle to contain a falling rupee just got tougher, as the currency fell to an all-time low against the US dollar in early trade on Thursday. The currency was valued at 69 per dollar, as a result of weakening macroeconomic fundamentals on the domestic front also weighing on the currency.
The current account deficit is widening and a weak global investment climate coupled with policy paralysis in New Delhi, sticky inflation and slowing growth have increased the aversion of foreign investors to India, pushing the capital account into the red.
Rating agency Standard & Poor recently cut the country's credit rating outlook to "negative", which has complicated matters further for the RBI, which has few options other than intervention and tinkering with rules on export credit to encourage inflows, RBI officials say.
The partially convertible rupee was trading at a life low of 69.03/04 against the dollar by 0355 GMT. The unit closed at 68.65/66 per dollar on Wednesday. The rupee had touched its previous record low of 68.8650 per dollar on November 24, 2016.
Traders said they were hopeful the Reserve Bank of India (RBI) would step in to prevent further losses in the currency.
[Source: Reuters]
