Indian Rupee falls to a record low
New Delhi: At a time when the leaders of the ruling party are thumping their chest over the height of the national emblem cast on the roof of the new Parliament House, the Indian rupee fell to a record low on Tuesday. It also showed a fall in the domestic share market and weakness in other Asian currencies on fears of a global recession weighing on the unit despite recent measures by the central bank to boost dollar inflows.
The euro hovered close to a 20-year low near parity to the dollar amid concerns that an energy crisis could tip Europe into recession, while the U.S. Federal Reserve continues to aggressively tighten policy to curb inflation.
The rupee came down by 22 paisa on Tuesday and would trade in the range Rs 78.75-80, sources said
According to the report, the Indian rupee continues to be weighed down by strengthening greenback continuously benefiting from the safe haven demand and Fed’s monetary tightening bias despite the weakening growth outlook.
Further the US 10-year yields regained the three per cent mark while commodities continued to slide lower. Providing some respite to the rupee was the fall in crude oil prices below US$100/bbl (from the week's high of US$114.8/bl) as fears of a potential global recession spurred concerns about oil demand.
Further, the rupee got some support as the Reserve Bank of India (RBI) stepped in with measures to alleviate the dollar tightness. The tug-of-war of diverging factors led to rupee trading in a narrow range of 78.87-79.38.
The leaders of the ruling party, however, kept mum over the continuous fall of the rupee. When the value of the Indian currency declined during the rule of the United Progressive Alliance (UPA) under Manmohan Singh, the then chief minister of Gujarat Narendra Modi said that if the value of the rupee falls, the honour of the country also goes down. Now that the value of the rupee has reached its lowest against the dollar, the prime minister is keeping mum. A few leaders of the ruling party argued that the fall of the value of the rupee would help India to have more foreign currency in reserve.