Rupee closes at a record low of 68.80 per dollar

The rupee lost all its moorings and hit a low of 68.82 against the US dollar on the inter-bank foreign exchange market today as foreign investors continued their sell-off of Indian stocks. The rupee closed at an all-time low of 68.80 a dollar today.

At 68.80 per dollar, the rupee is down 256 paise, or more than 3.88 per cent, from its previous close of 66.24/25 on Tuesday.

The rupee had lost 194 paise against the dollar yesterday and another 110 paise on Monday. The rupee is down 560 paise, or 8.89 per cent, in the first three days of the week.

The rupee also lost ground and breached key levels against a host of other currencies, including British pound, euro and Swiss franc amid fresh concerns over foreign capital outflows.

The British pound crossed Rs106 level while the euro went past Rs92 and the Swiss franc touched Rs75 mark. The Canadian dollar traded at Rs65 and the Australian dollar crossed Rs60 while the New Zealand dollar, Singapore dollar, Bruneian dollar and Libyan dinar all crossed the Rs50 level.

To the delight of Gulf-based Indians, the Kuwaiti dinar is now worth more than Rs240, Bahraini Dinar over Rs180 and the Omani rial is past Rs175.

The rupee initially recovered from its historic low of 68.82 on dollar selling by banks and exporters. The RBI's mild intervention, however, did not help the rupee much.

A massive intervention could, however, cost heavy outflow of forex reserves in the short-term.

At 2.19 p.m. local time, the rupee was down 175 paise at 67.99 and continued to fall, closing at 68.80 a dollar as the trading session ended.

The rupee has depreciated by over 21 per cent against the pound in the past three months, from close to 83 in mid-May. It was at 80 against the pound in March.

Forex dealers said besides strong demand for the US currency from importers and banks, dollar's strength against other major currencies overseas also influenced market sentiment.

Uncertainty over a possible US-led military strike against Syria also weighed on the market sentiment. Financial markets also factored in the expected increase in government's subsidy burden following the passage of the food security bill.

Several measures announced by the government and the RBI have so far failed to check volatility of the rupee even as weak the record current account deficit and concerns over rising subsidy bill put pressure on the rupee.

The rupee is down over 20 per cent against the dollar so far this year despite measures announced by the RBI, including restriction on Indian firms investing abroad and on outward remittances by resident Indians, to arrest the rupee slide.

At least eight foreign currencies currently trade over the Rs100 mark, including Isle of Man pound, Gibraltar pound and Jersey pound while the euro and Jordanian dinar are in the 90s. At least 50 foreign currencies trade at over Rs50 level.

At least 100 currencies are now valued higher than the rupee. Currencies of lower value compared to Indian rupee now include those of Bangladesh, Liberia, Algeria, Serbia, Kenya, Angola, Japan, Nepal, Pakistan, Albania, Syria, Iceland, North Korea, Sri Lanka and Nigeria.

On top of it, rating agency Fitch had, on Monday, warned of a downgrade if the country is unable to meet the fiscal deficit target.