Rupee opens at fresh record low of 70.25 a dollar amid Turkey crisis, strong dollar

The rupee on Thursday fell 29 paise compared to Tuesday’s close.

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The Indian rupee started off the session on a weak note, hitting a fresh record low of 70.25 to the dollar on Thursday. It fell 35 paise compared to Tuesday’s close following Turkey crisis and strong demand for US dollar.

After opening sharply lower, it extended fall and depreciated as much as 42 paise in the morning to hit an intraday all-time low of 70.32 a dollar.

Samiran Chakraborty of Citi told CNBC-TV18 that persistent disappointment on the current account deficit (CAD) & weak Emerging markets sentiment opens up the possibility of the dollar-INR heading towards the 72 mark as the 67 to 69 range shifted to a 69 to 72 range.

On the back of the upward momentum in the trade deficit & the stickiness of demand-side pressure, Citi has revised their trade deficit forecast by $10 billion to $204 billion & now expects the current account deficit at $88 billion or 3.2 percent of GDP, he said.

On Tuesday, the rupee hit 70 to the dollar for the first time, falling 15 paise intraday to touch an intraday all-time low of 70.08 a dollar due to a sharp depreciation in Turkish lira after the United States imposed tariffs on steel and aluminum imports, and strong demand to the American currency.

The likely intervention by the Reserve Bank of India during the day had helped the rupee recover and closed 3 paise higher at 69.90 a dollar.

The rupee fell more than 9 percent year-to-date and around 2 percent in August.

Turkish lira depreciated sharply last week after the US President Donald Trump doubled tariffs on imports of Turkish steel and aluminum. The fall was also on account of concerns about country’s President Tayyip Erdogan showing reluctance to hike interest rates despite rising inflation and a widening diplomatic spat with the United States.

Meanwhile, Turkish Lira recovered to trade around 6 to the dollar after slumping to a record low of 7.24 on Monday.

The dollar is near to its 13-month high today due to political turmoil in Turkey and concerns about a trade war with world’s second largest economy China.

The dollar index against a basket of six major currencies stood at 96.58 after rising to a 13-month high of 96.984 on Wednesday.

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