Indian Rupee breaches 73 mark, plunges to fresh all-time low

Dwayne Harmon
October 5, 2018

"There could be an upward revision in the inflationary projections for the year on account of higher oil prices, increase in MSPs and imported inflation (on back of rupee depreciation)", CARE Ratings said in a research note.

A plunging currency may prompt the Reserve Bank of India to hike interest rates for the third time since June when it meets on Friday.

The rupee opened lower at 73.26 per dollar on Wednesday due to high crude oil prices against the last close of 72.91 per dollar.

The greenback also shot to its highest so far this year on the yen and an all-time high against the Indian rupee.

The RBI belied market expectations of a rate hike, which was expected to arrest the free fall in the rupee's value.

While a majority of analysts expect a quarter-point raise, some analysts said they would not be surprised if there's a 50 bps increase, given surging oil prices and the rupee's battering.

Mumbai: The rupee on Friday fell past the 74-mark to hit at a fresh low against the dollar after the Reserve Bank of India changed its stance to "calibrated tightening" from "neutral" earlier.

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The policy repo rate under the liquidity adjustment facility (LAF) remained unchanged at 6.5 per cent.

China's financial markets are closed for the week.

The benchmark Sensex plunged by 527.94 points, or 1.39 per cent, to 35,447.69 in morning deals.

India's benchmark 10-year sovereign yield rose to 8.16%.

One underlying concern is that the RBI's selling of dollars to stem the slide in the rupee has drained Rs 1.5 lakh crore from the banks since April.

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.

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