Turkish turmoil downs Indian rupee; Rahul Gandhi takes swipe at PM Modi

The rupee is tumbling and fell to its lowest level since Independence after the Indian currency breached the Rs 70 mark to a dollar on Tuesday, August 14.

This immediately had a political reaction with the opposition Congress unleashing a stinging and sarcastic campaign against the BJP and Prime Minister Narendra Modi. A senior Congress leader quipped, "The BJP managed to do what the Congress could not do in seventy years," referring to the plunging value of the rupee.

AICC president Rahul Gandhi described the fall of Indian rupee as crashing to a historic low. In a tweet, the Congress president said, "The Indian #Rupee just gave the Supreme Leader, a vote of NO confidence, crashing to a historic low."

Rahul Gandhi also tweeted a video of Narendra Modi as the then-Chief Minister of Gujarat castigating the UPA government when the rupee touched Rs 69 to a dollar mark in 2014. In the tweet laced with sarcasm, Rahul asked the people to "Listen to the Supreme Leader's master class on economics in this video, where he explains why the Rupee is tanking."

The video clip is of Narendra Modi blasting the central government of its inability to do anything to shore up the value of rupee in the international market.

Foreign exchange experts, cut through the politics of it all and zeroed in on the exact cause of the fall of the rupee to its lowest levels and ascribed it to international factors. The government and the RBI can do precious little to intervene on this matter at this juncture, said a foreign exchange expert.

Coming to the reason for the fall in rupee value in international markets, Salil Datar, Executive Director & CEO, Essel Finance VKC Forex, said that the turmoil in Turkey was responsible for the fall in Rupee value.

"Inflation data released on August 13, 2018, was positive. Oil has eased off and continues to be at $72 levels. So, the typical factors that affect the Indian rupee from an economic point of view have not changed. The Turkish lira and the cross-currency impact along with the exposure of banks to Turkey are leading to the turmoil," the foreign exchange expert told Covai Post.

"The dollar index, which used to be around 94 levels, has spiralled to 96+ in the past 4-5 days as the dollar is seen as a safe haven. This has resulted in the Rupee taking a tumble. As long as oil continues to be at the current levels, we expect the Rupee to trade between 69.50 and 70.25 levels," Datar said.