The rupee continues to slide down as it touches the fresh record low of 70.02 against the US dollar today. The Indian rupee has depreciated by 10 per cent in 2018. The rupee has been suffering due to turmoil in the Turkey currency market raising concerns that it may impact financial institutions in Europe. The rupee on Monday crashed by 110 paise, which is its biggest single-day fall in five years ending at a lifetime low of 69.93. Previously, the rupee had dropped 2.4 per cent or 148 paise in a single day in August 2013. Also Read - Rupee Hits New Record Low of 74.27 Against US Dollar; Plunges 21 Paise After Morning Gains
The US dollar has gained strength as experts fear that the economic crisis in Turkey could soon spill over its impact on global economies. Lira, the currency of Turkey, has fallen by more by more than 50 per cent over the period of last 12 months. Traders are now worried over the Turkish crisis spreading its impact over the world economy. Also Read - Indian Rupee Crosses 72-Mark Again , Down by 81 Paise in Early Trade
Currently, the economy of Turkey is going through a rough patch. The inflation in the country is at almost 16 per cent compared to 4.17 per cent in India in the month of July. The recent increase in inflation has led the Reserve Bank of India (RBI) to increase the repo rate by 25 basis points twice in two months. The Turkey government realising the gravity of the situation has assured steps to rein in the crisis. Also Read - Indian Rupee Falls to All Time Low of 71.37 Per Dollar
Similarly, current account deficit (CAD) has reached 5 per cent of Gross Domestic Product (GDP) in Turkey against 2 per cent in India. Current Account Deficit is the excess of imports over exports. High CAD is bad for the economy as it indicates an outflow of money from the country leaving behind no surplus.
Salil Datar, CEO and executive director, Essel Finance VKC Forex, said, “The current drop in Rupee is mainly due to the crisis in Turkey. The dollar index has strengthened beyond 96 levels reflecting its safe-haven status due to a possible domino effect of the Turkey crisis on the other financial institutions.”
The rupee, however, recovered from the all-time low of 69.91 and strengthened by 23 paise to 69.68 against the US dollar in opening trade at the interbank foreign exchange market today.
On Monday, the rupee had depreciated by 1.57 per cent, to a record low of 69.91 against the US currency amid fears that Turkish currency turmoil can unfold into the global crisis.