Indian rupee breaks 69 vs dollar for the first time
NEW DELHI: The rupee has just hit a new all-time low. The Indian currency collapsed to a record low of 69.10 against the US dollar by plunging 49 paise in early trade today as rising crude oil prices deepened concerns about the country's current account deficit and inflation dynamics. It had opened at 68.87 a dollar at the interbank foreign exchange market - against 68.61 previously - and quickly proceeded to set a record. The rupee had touched its previous record low of 68.86 per dollar on in November 2016.
Since Monday, the rupee has depreciated 1.2 per cent as consistent dollar demand from banks and importers, mainly oil refiners, following higher crude oil prices kept the rupee under pressure. Global oil prices have climbed after the US asked its allies to end all imports of Iranian oil by November. Concerns over supply disruptions in Libya and Canada also pushed prices higher. Brent crude was trading at nearly $78 a barrel in Asian trade today.
Given that India is the world's third largest oil importer, any hike in global oil prices will inflate the import bill and disrupt the fiscal position. India's current account deficit (CAD) has already widened 42 per cent year-on-year to $160 billion in FY18, and a high deficit means the country has to sell rupees and buy dollars to pay its bills. This further reduces the value of the rupee.