Indian Rupee drops to very low against US dollar

New Delhi, Aug 14: In a shocking news, Indian rupee touched a record low of 70.07 after opening marginally higher at 69.85 per dollar in the early trade on Tuesday.

It has ended at an all-time closing low the day before. It ended 110 paise lower at 69.93 on Monday against its Friday's close of 68.83, which is a biggest single session decline against dollar since September 3, 2013.

The fall in rupee was mainly impacted by drop in Turkish Lira, which helped the US dollar to gained strength on the back of fears that economic crisis in Turkey could spread to other global economies.

The technical pattern indicates that the rupee could further depreciate towards Rs 71 per dollar.

"Broader emerging market currency movement, dollar strength, and the trend in crude oil prices will drive the outlook for the INR in the immediate term.

Given the prevailing risk aversion in the global markets, we don't rule out that the rupee will briefly cross 70/USD before retracing to 69/USD levels," said Aditi Nayar, Principal economist, ICRA.

"The trend in the INR would impact whether FIIs want to enter the Indian debt market at this juncture, following the revival in inflows seen in August 2018," Nayar said.

According to Motilal Oswal report, rupee fell to fresh record low levels against the US dollar following Turkish Lira shock and witnessed biggest one-day fall in the last five years. Turmoil in Turkey has not only weighed on the Indian rupee but also on most Asian currencies. This year the rupee is down by over 7% and has been one of the worst performing currencies in the Asian pack."

"On the domestic front, India's inflation number showed price rise eased in July compared to the previous month strengthening views that the RBI in its next meeting could hold rates. Inflation in July rose 4.17% compared to growth of 4.92% in the previous month. Today, USD-INR pair is expected to quote in the range of 69.70 and 70.25-70.50, it added.