Rupee skids in line with other emerging-market currencies

Reuters: The rupee edged down yesterday in line with other emerging-market currencies, mainly due to global concerns, dealers said.

The rupee, which hit an intraday low of 160.10 per dollar, ended at 160.00/10, compared with Thursday’s close of 159.95/160.10. It hit a record low of 160.17 on 20 June and has declined 4.2% so far this year.

“This is in line with other emerging-market currencies which came under severe pressure on global and geo-political concerns. This has nothing to do with domestic concerns,” a currency dealer said.

“Until the pressure on emerging-market currencies eases, the downward pressure on the rupee is going to remain.”

Turkey’s lira plunged as much as 14% on the back of a deepening rift with the United States, worries about its own economy and lack of action from policymakers.

On 3 August, the Central Bank left its key policy rates unchanged, saying the decision backed its goals for stabilising inflation and fostering sustainable economic growth.

Central Bank Governor Indrajit Coomaraswamy had told reporters that several emerging market currencies had declined more than the rupee, adding: “If we reduce rates, that would put further pressure on the exchange rate.”

Sri Lanka last week raised import duties on small hybrid cars by more than 50% to boost revenue and curb a sharp fall in the rupee.

Coomaraswamy had said earlier that the rupee’s decline was driven mainly by external factors.

Foreign investors sold government securities worth a net Rs. 2.56 billion ($ 16.02 million) in the week ended 8 August, bringing the outflow so far this year to Rs. 39.1 billion, Central Bank data showed.