Indian rupee on Monday touched an all-time low of 69.62 per dollar in early trade, tracking broader weakness in other emerging market currencies on concerns of a spill-over from a crisis-hit Turkey.
The Reserve Bank of India was seen intervening to stem a sharp fall in the rupee, two dealers said. “The RBI was there to curtail the volatility in early trade, but not in a big way,” said a senior dealer at a foreign bank.
The rupee reversed marginally from its record lows to trade at 69.53 to the dollar. It had ended at 68.84 to the dollar on Friday. The 10-year benchmark bond yield rose to 7.80 percent from its previous close of 7.75 percent, tracking the weakness in rupee.
Investors preferred safe-havens such as the US dollar and the yen after a plunge in the Turkish Lira sent all emerging market currencies sharply lower. The lira has fallen about 45 percent against the greenback this year on worries over Turkish President Tayyip Erdogan’s increasing control of the economy and a deepening diplomatic rift with the United States.
“There is no point spending a lot of dollars in defending a rupee when the force of the fall is so strong across emerging markets,” said a senior forex dealer at an Indian state-run bank. The next crucial level for the rupee is 69.80 to the dollar, he added.
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