Rupee breaches 70 but markets, government unfazed

Rupee breaches 70 but markets, government unfazed

The government on Tuesday blamed "external factors" for the rupee's fall to an all-time low against the United States dollar and said that there is nothing to worry about as of now.

According to reports, heavy sell-off in global currencies, including Turkish lira, fueled demand for safe-haven assets and caused the rupee to nosedive. "Importers were seen aggressively buying dollars in the forward market putting further pressure on the rupee", said Abhishek Goenka, chief executive officer (CEO), India Forex Advisors.

"There is nothing to worry at this stage".

The rupee hit an all-time low of 70.1 to a U.S. dollar earlier today on concerns over Turkey's economic woes. While opposition parties attacked the government, hitting back at the Prime Minister for his attacks against the UPA government in 2013 for the falling rupee, Congress chief Rahul Gandhi described the weakening to an all-time low of 70.10 as "a vote of no-confidence".

"Further rise in crude prices or fresh trouble in the emerging markets, Euro area could result in risk-off sentiments setting in resulting in a fresh round of weakness for emerging market currencies including India despite intermittent RBI intervention from time to time".

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BSE's Sensex was trading higher by 226.50 points at 37,871.40 at 1 pm, while Nifty 50 was up 77.85 points to trade at 11,433.60.

SBI Chairman Rajnish Kumar said all currencies have weakened against the dollar, but the Indian currency has not weakened very much in comparison to other currencies. This is the biggest single day fall for the rupee in the past five years.

The rupee reversed marginally from its record lows to trade at 69.53 to the dollar.

The corresponding rates were 69.4685 and 79.1876, yesterday.

Investors preferred safe-havens such as the USA dollar and the yen after a plunge in the Turkish Lira sent all emerging market currencies sharply lower.

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