Rupee Hits New All-Time Low Of 73.77 Against Dollar

Rupee Hits New All-Time Low Of 73.77 Against Dollar

Foreign investors remained net sellers for a third day pulling out ₹2,760.63 crore from stock markets.

The S&P BSE Sensex fell 550 points or 1.5 per cent to close at 35,975 on Wednesday as negative sentiments weighed on the back of the rupee breaching the psychological mark of 73 against the U.S. dollar.

With the rupee plunging to a historic low, the government and the RBI swung into action to slow down a further fall of the battered Indian currency as global economic conditions continued to deteriorate and fears of higher inflation increased.

On Thursday, the United States dollar touched 1.3828 against the Singapore dollar, its highest since Jul 11 previous year.

The RBI's monetary policy committee (MPC) left the repo rate at 6.50 percent, though 35 out of 64 analysts surveyed by Reuters last week had forecast a rate hike.

While no changes have been made to the repo rate, the bank has changed its stance from "Neutral" to "Calibrated Tightening".




SBI in its research report had said RBI should hike the repo rate by at least 25 basis points to control the value of rupee from falling.

US Treasury yields jumped to multi-year peaks on Wednesday, with the 10-year yield reaching a seven-year high after Wednesday's robust data bolstered the case for the Fed to raise interest rates again in December and beyond. "We rule out a hike of 50 basis points, as it may spook the market". Indian bond yields spiked as prices fell.

Hawkish comments about the United States economy by Federal Reserve Chairman Jerome Powell have also boosted the dollar buying.

Business Today quoted V.K. Sharma, head private client group and capital market strategy at HDFC Securities as saying, "Indian rupee has depreciated around 11% year-to-date".

"There is too much negativity in the markets as of now and the indices look oversold, which is why a further sharp decline from the current levels is not expected immediately", said Rohit Srivastava, fund manager, Sharekhan-BNP Paribas.

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