New Delhi, Jul 12 (EFE).- The Indian rupee on Tuesday hit another historic low by trading at 79.60 units per United States dollar, with its devaluation intensifying due to investors taking refuge in the dollar amid fears of an economic recession.
The Indian currency has kept plummeting to new all-time lows over the past few weeks, as part of a downward spiral spanning nearly four years.
Since the beginning of this year, the rupee has lost 6.8 percent of its value compared to the dollar, and seems set to breach the 80 units per dollar mark.
The Ukraine conflict, which has led to a sharp rise in oil prices and caused instability in global markets, has been the biggest reason behind the slump.
However, in recent weeks, the rupee’s devaluation has mainly been driven by a bullish dollar, as investors have fled to the safety of the greenback amid the possibility of a global recession.
Financial consultancy Forex India said that “the rupee closed markedly weaker today even as the US dollar index surged to a fresh near two-decade high. The strength in the dollar index was due to weakness in the euro and on demand for the safe-haven greenback.”
On Monday, the Reserve Bank of India announced a slew of measures to try and check the rupee’s slide.
“It has been decided to put in place an additional arrangement for invoicing, payment and settlement of exports/imports in Indian national rupee,” the central bank said in a statement.
Traditionally, most of the import and export related transactions of Indian companies have been carried out in dollars, but with this new mechanism, the RBI aims to enable the process in rupees and check the demand for other currencies in a move to buoy the Indian currency in international markets.
Several analysts have suggested that this mechanism would also help remove trade hurdles with countries such as Russia, which has been facing international sanctions after its invasion of Ukraine.
Despite facing international pressure to isolate Moscow since the conflict begun, India has ignored the West’s appeals to stop importing Russian oil and continues to use Russian supplies to meet its high energy needs. EFE