Indian Rupee in tail spin, hits all-time low vs US dollar; 10 key highlights

The embattled rupee, which plunged by 37 paise or 0.54 per cent to settle at a 19-month low of 68.61 against the US dollar yesterday, collapsed to a lifetime low of 69.10 against the US dollar by plunging 49 paise in early trade today as rising crude oil prices deepened concerns about the country's current account deficit and inflation dynamics. Here are the key highlights to explain the situation.

1. Consistent dollar demand from banks and importers, mainly oil refiners, following higher crude oil prices kept the rupee under pressure.

2. At the interbank foreign exchange market, the rupee opened at 68.87 a dollar against 68.61 previously and sank to 69.10 in morning deals, falling 49 paise.

3. Global oil prices have climbed after the US asked its allies to end all imports of Iranian oil by November. Concerns over supply disruptions in Libya and Canada also pushed prices higher.

4. The partially convertible rupee was trading at a life low of 69.03/04 against the dollar by 0355 GMT. The unit closed at 68.65/66 per dollar on Wednesday. The rupee had touched its previous record low of 68.8650 per dollar on November 24, 2016.

5. Traders said they were hopeful the Reserve Bank of India (RBI) would step in to prevent further losses in the currency.

6. The rupee yesterday plunged by 37 paise or 0.54 per cent to settle at a 19-month low of 68.61 against the US dollar as growing crude oil prices fanned fears of a widening current account deficit and a spike in inflation.

7. Investors grew more nervous that higher crude oil prices will worsen India's current account deficit and fuel inflation. 

8. 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.

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9. Currency traders were also worried about the future of global trade against the grim backdrop of an escalating trade rhetoric between the US and China.

10. The rupee, which strengthened 5.96 per cent against the US dollar last year, has been on a general downtrend since the start of 2018. It has lost nearly 7 per cent this year so far.