Rupee sinks to all-time low on Turkey shock

Mumbai, August 13

The rupee on Monday crashed by a mammoth 110 paise — its biggest single-day fall in five years — to end at a lifetime low of 69.93 as the US dollar gained rapid strength amid fears that economic crisis in Turkey could spread to other global economies.

Panic and capitulation overshadowed trading mood as traders and speculators saw no signs that monetary authorities would step into the foreign exchange market to support the domestic unit.

This is the biggest single day fall for the rupee in the past five years. Previously, the rupee had dropped 2.4% or 148 paise in a single day in August 2013.

The rupee also ended lower against British pound, euro and Japanse yen.

“The rupee was mainly impacted by fall in Turkish Lira,” said a treasurer of a state-owned bank.

The Turkish lira dived almost 8% on Monday to a low of 7.24 against the US dollar, fuelling fears that it may impact financial institutions in Europe. Later, it recovered some ground after the finance ministry assured steps to rein in the crisis.

Global currencies except for safe-haven Japanese yen and Swiss franc faced a rout against the dollar. The pound sterling was trading near 2018 lows, the euro declined to a 13-month low, the Russian ruble lost 2%, while South African rand plunged 7% in a global meltdown.

The dollar index was trading higher at 96.18.

Lack of FII inflows and growing oil prices are also affecting the rupee, a PSU bank official said. Foreign investors sold shares worth Rs 971.8 crore on a net basis, provisional exchange data showed.

“RBI will not be comfortable at these levels. It was seen defending rupee at all levels,” said a senior treasury official of a public sector bank, while predicting that the rupee may fall to 70 levels against the dollar soon.

The rupee had opened strong by 41 paise at 68.42 against the US dollar in early trade on Monday, helped by revived sentiments following optimistic macroeconomic outlook.

However, it soon reversed the gains and plunged to an early low of 69.62 in line with weakening domestic equities. — PTI