New Delhi: In repetition of a headline seen regularly in the past year, the rupee has declined further – this time reaching the 86-mark against the US dollar.
The 18-paise decline led to the breach of the 86 mark – one that was being called ‘psychologically significant’ by watchers and the news media.
The local unit settled at 86.04 against the US currency on January 10. This is the lowest the rupee has ever been in its lifetime.
Among reasons cited in reports is a surge in crude oil prices and a lack of confidence in domestic equity markets.
Many are also anticipating restrictive trade measures by the incoming US president, Donald Trump, who is set to take over on January 20.
At the interbank foreign exchange, reported the news agency PTI, the rupee opened at 85.88, hit an intra-day peak of 85.85 before breaching the 86-mark to settle at the lowest-ever level of 86.04.
Bloomberg has collated market estimates to note that there is a nearly 60% likelihood of the rupee weakening to 87 per dollar by the end of March, compared with just an 9% chance of it recovering to 84 during the same three-month period.
The rupee is likely to trade between 88.50 and 89.00 over the next six months, potentially regaining some lost trading competitiveness, an expert quoted in the report said.
The report cites how volatility has risen to its highest in more than a year, stoking speculation that the new Reserve Bank of India governor, Sanjay Malhotra, may allow the currency to fluctuate more naturally compared to his predecessor.
