India's currency falls to all-time low against US dollar

India's currency falls to all-time low against US dollar

India's currency falls to all-time low against US dollar

The rupee hits new low of 73.77 by plunging 43 paise against USA dollar on Thursday.

So far this year, the rupee has declined over 12% against the USA dollar.

The greenback rose about 0.3 per cent against a basket of currencies after news that U.S. service sector activity raced to a 21-year high in September.

The Indian rupee on Thursday slumped further to an all-time low of 73.77 against the USA dollar.

China's financial markets are closed for the week.

The current account has faced additional pressure as India, like many emerging market economies, has also suffered due to rising US interest rates drawing investors away. Brent crude oil is now trading near Dollars 85/bl, at the highest level since November 2014.

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At its previous monetary policy meeting in August, the central bank raised the benchmark interest rate by 25 basis points to 6.50 per cent on inflationary concerns.

Mr Khoon Goh, head of Asia research at ANZ Banking Group in Singapore, said the mix of strong United States data and the Fed chair's comments bumped up the dollar and U.S. bond yields, putting downward pressure on Asian currencies.

It comes just one day before the Indian central bank is expected to raise rates on Friday to prop-up the rupee.

The BSE benchmark Sensex plunged over 550 points Wednesday to slip below the 36,000-level after the rupee collapsed to a new life-time low amid surging crude oil prices and unabated foreign fund outflows.

Research Analysts say sharp rise in the crude oil prices along with steep depreciation in the rupee might push inflation higher in the coming months.

The IL&FS debt problems have pushed up short-term interest rates sharply with one-year commercial paper rising by almost 70 basis points to 9.20 percent since early August, while the one-year treasury bill rate is up 50 bps to 7.73 percent.

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