Indian Rupee hits all-time low following Turkish crisis
The Indian rupee fell to an all-time low of 70.08 a dollar for the first time in history following the rapid fall of the Turkish Lira, adding to concerns over the strength of emerging economies.
The Indian government has blamed external factors for the fall, with The Press Trust of India (PTI) quoting Indian Economic Affairs Secretary Subhash Chander Garg as saying the rupee “is depreciating due to external factors” and there is “nothing at this stage to worry”.
In early trade today, the rupee crossed the psychological 70-mark amid concern over the risk of contagion from Turkey’s financial-market turmoil.
However, there was some respite for the lira after days of heavy losses. The currency rose 5% to 6.54 to the US dollar on Tuesday morning, after slumping 20% in the past four working days. The country’s central bank stepped in on Monday by pledging to provide liquidity to its banking sector.
According to Guardian, investors are also taking some comfort from news that Turkey’s finance minister, Berat Albayrak, will hold a conference call with investors from the US, Europe and the Middle East on Thursday, his first since assuming the post almost two months ago.
Turkey’s stock market was up 2% in early trading, after a loss of nearly 4% the day before, when Turkey’s president, Recep Tayyip Erdoğan, lashed out at the US for imposing sanctions in an attempt to force Turkey to release an American pastor, who is under house arrest.
The Indian rupee had recovered slightly by the afternoon and was trading at 69.86, up 0.09%, with traders saying that it recouped some of the losses as state-run banks sold the dollar on behalf of India’s central bank, the Reserve Bank of India.
So far this year, the rupee has weakened nearly 9%, while foreign investors have sold $6.8 million and $5.15 billion in equity and debt markets, respectively.
Analysts believe that factors such as broader emerging market currency movement, dollar strength, and the trend in crude oil prices will continue to drive the outlook for the rupee in the immediate term.