The rupee on Thursday was down by 28 paise at 69.89 against the US dollar. The rupee is at an all-time low amid rising crude oil prices which will put pressure on the current account deficit of the country. Last time, the rupee was at a historic low of 68.86 on November 24, 2016 and a lifetime closing low of 68.80 on August 28, 2013. Also Read - Real GDP in 1st Half of The Year to Remain in Contraction Zone, Says RBI Governor
Here are six things to know about the depreciating rupee
1) India imports 80 per cent of its crude oil, and, therefore, an increase in crude oil prices put pressure on the currency. The crude oil prices have started rising after the US asked its allies to end all imports of Iranian oil by a November deadline. Prices also went up on the concerns of supply disruptions in Libya and Canada. Also Read - RBI 24th Monetary Policy Committee Meet: No Change in Repo Rate, Reverse Repo Rate, Announces RBI
2. The escalating tension between the US and China in terms of trade between the two countries has also made currency traders worried about the future of global trade.
3) Massive sell-off by foreign investors in the domestic equities also aggravates the problem as it results in capital outflows leading to depreciating rupee.
4) The currency market was nervous after RBI voiced its concerns about the banking sector in its bi-annual financial stability report. Higher inflation, concerns over fiscal deficit and hawkish stance from the RBI have driven up bond yields, hurting bond prices. The 10-year benchmark bond yield shot-up to 7.87 per cent from 7.83 per cent.
5. The depreciating rupee has pushed RBI to intervene yesterday as exporters came forward to sell dollars
6. Gold which is inversely related to the dollar remained weak closing at Rs 31,570 per 10 gram amid weakening global trend
(With inputs from PTI)