Rupee plunges below 68 for first time since Jan ’17
The rupee breached the 68 level against the US dollar for the first time since January 2017 due to the political uncertainty following the Karnataka state elections. The domestic currency, which had closed at 67.52 on Monday, weakened to 67.75 in early trade and gained to 67.56. However, news of a fractured poll verdict led to the currency weakening to 68.11 at close.
According to Centrum Direct senior VP and treasury head M Hariprasad, the currency has weakened during the peak season for international travel. Also, those pursuing overseas education make their forex purchases in mid-June and would end up paying more for the same amount of dollars.
While the RBI has been consistently intervening in the market by selling dollars, dealers said that the central bank did not appear to be trying to reverse the direction of the domestic currency and the intervention was more aimed at curbing volatility. The rupee has been the worst performer in Asia in 2018. Given the dependence on oil imports, the weakening rupee will have an inflationary impact.
The Times of India, New Delhi, 16th May 2018