New Delhi, Jun 13 (EFE).- The Indian rupee on Monday fell to another all-time low, with its exchange rate dropping to 78.28 rupees per United States dollar – marking the first time it has breached the 78 mark – as the currency continues a downward spiral that has seen it lose 5 percent of its value in less than six months.
This was the first consecutive day when the Indian rupee touched record lows, after on Thursday it dropped to 77.74 units per dollar, and on Friday sunk down to 77.93 units, according to the currency exchange rate.
The fall in the Indian currency coincides with the strengthening of the US dollar and a sustained rise in international oil prices.
The rupee, which has continued to depreciate throughout the past decade, has lost around 40 percent of its value since 2012, when it was valued at 53.4 units per dollar.
The recent slide is due to “a combination of global as well as domestic factors, as India’s inflation rate has been sharply rising and that’s an important factor putting pressure on the rupee,” financial analyst Sanjaya Baru told EFE.
Moreover, “we have a very difficult global economic environment, and though India has $600 billion in foreign reserves, there is considerable pressure on the current account, (…) and the rupee has come down under that pressure,” he added.
Consultancy EForex India said in its analysis of rupee’s performance on Monday that the dollar climbing to a four-month high compared to the main set of currencies was a key factor, along with a drop in Asian stock markets.
In such a scenario, analysts and the market are keenly watching the Reserve Bank of India for its next move, as it is expected to intervene to stop rupee from entering spiral of further devaluation.
Although “the central bank normally doesn’t reveal its mind as far as the exchange rate of the rupee is concerned, (…) as of now it appears that the bank has chosen not to intervene yet. It is allowing the rupee to find its value,” Baru said.
However, he added that “at some point I would expect the central bank to intervene in the market and show some elements of guidance.” EFE