Indian rupee collapses to 73.77 against United States dollars

Indian rupee collapses to 73.77 against United States dollars”

With the rupee plunging to a historic low, the government and the RBI swung into action to slow down a further fall of the battered Indian currency as global economic conditions continued to deteriorate and fears of higher inflation increased. As such, short-term move in oil prices remain triggers for a move in the rupee, it added.

The rupee collapsed to a fresh low of 73.81 as the dollar reached a 11-month high against the yen and stood tall against other peers on upbeat USA data and comments from Federal Reserve Chairman Jerome Powell that were seen as hawkish.

So far this year, the rupee has declined over 12% against the U.S. dollar.

The bank are predicted to act to tackle rising United States interest rates, capital outflows from emerging markets and India's weakening balance of payments and current account deficit.

On Wednesday the rupee slipped to a low of 73.42 per dollar as crude oil prices breached the 85 US dollars per barrel mark, leading to huge outflows of cash.

Mumbai:The rupee fell past the 73 mark and bond yields climbed over 12 basis points on Wednesday after crude oil surged to almost $85 per barrel, a near four-year high.

The 10-year gilt yield closed at 8.112%, up over 12 basis points from its previous close of 7.988%.

Mr Khoon Goh, head of Asia research at ANZ Banking Group in Singapore, said the mix of strong USA data and the Fed chair's comments bumped up the dollar and USA bond yields, putting downward pressure on Asian currencies.

DBS economist Radhika Rao expects a rate hike, along with the RBI shifting its stance to "hawkish" from "neutral".

It comes just one day before the Indian central bank is expected to raise rates on Friday to prop-up the rupee.

Investors remained concerned over sustained foreign capital outflows and soaring crude oil prices that crossed the Dollars 85 per barrel.

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