Rupee Fall Has A Surprising New Reason: Not Oil, But RBI
Thursday, October 11, 2018 IST
The rupee is seen sliding to 75 per dollar by year-end, according to median of 10 analysts surveyed by Bloomberg.
The worst run of rupee losses in 16 years is set to extend. Only this time, the declines might not be triggered by oil but by the surprise move by India's central bank to hold rates despite the currency's free fall.
The rupee, which has fallen for six straight months in the longest stretch since 2002, is seen sliding to 75 per dollar by year-end, according to median of 10 analysts surveyed by Bloomberg. The December-end estimate has inched up from 69 at the start of September.
Reserve Bank of India Governor Urjit Patel's comments Friday that the rupee's drop is moderate in comparison to emerging market peers and that the central bank doesn't have any target in mind unnerved investors who were expecting the authority to boost its defense of Asia's worst-performing major currency. The rupee fell 0.4 percent on Tuesday to a record low of 74.3950 per dollar.
"Governor Patel has effectively left the rupee out in the cold and insinuated that it is not his job to determine the appropriate level for the currency," said Charlie Lay, an analyst at Commerzbank AG in Singapore. "RBI has seemingly opened the floodgates for further rupee weakness."
The rupee fell past the 74 to a dollar mark for the first time soon after the RBI's decision, and analysts, whose year-end estimates have been obliterated by the meltdown, cut their targets further. Skandinaviska Enskilda Banken AB said the rupee could test 75 in the near term while ING Bank NV said the bank's recent downgrade to 75 wasn't enough.
To be sure, the RBI has for long maintained that it steps in only to curb undue volatility and doesn't target any currency level. That stance places the authority behind counterparts in Indonesia and the Philippines, which have been actively supporting their currencies, Madhavi Arora, an economist at Edelweiss Securities Ltd., wrote in a note Tuesday.
"We expect the weakness to persist, with the rupee heading toward 75-plus levels against the dollar, unless some additional assertive policy steps come through," she said.
Related Topics
Related News & Articles
MUMBAI: A swanky and eco-friendly public toilet equipped with solar panel and vacuum technology to save water has come up at the Marine Drive in ...
Recently posted . 450 views . 2 min read
Pirates free oil tanker with 22 Indian crew in Gulf of Guinea
...
Recently posted . 572 views . 10 min read
Story Highlights
Boiler pipe burst in 500 MW power unit that started operating in March
Huge fire broke out, d...
Recently posted . 681 views . 6 min read
Justice Kurian Joseph’s suggestion that Collegium may send file back is distressing, says senior Govt functionary
Recently posted . 562 views . 1 min read
Accumulated gas released with high pressure caused the blast.
Recently posted . 615 views . 0 min read
Trending News & Articles
While the Uttarakhand High Court has asked to block 857 websites, the Ministry of Electronics and IT (Meity) found 30 portals without any pornographic content.
...
Recently posted . 61K views . 1 min read
The four boys as well as five school officials, including the director and principal, were arrested after the incident. The minors were presented before the Juvenil...
Recently posted . 8K views . 1 min read
Rahul was having an Italian passport and was carrying suitcase full of dollars. Some say it was about was it $2 million.
Rahul and his girl friend was th...
Recently posted . 7K views . 7 min read
True – Tr...
Recently posted . 6K views . 83 min read
More in National
India is a blessed with diversity not only culturally but also with physical features like dry desert, evergreen forest, snowy mountains, long coast and fertile pla...
Recently posted. 2K views . 2 min read
NEW DELHI: Congress Vice-President Rahul Gandhi's sixth question to Prime Minister Narendra Modi is on the seventh pay commission and its implementation. &ldquo...
Recently posted. 596 views . 10 min read
Amrapali Group directors Anil Kumar Sharma, Shiv Priya and Ajay Kumar failed to provide documents relating to company's accounts to auditors.
Recently posted. 1K views . 1 min read
Recently posted . 1K views
Recently posted . 1K views
Recently posted . 1K views
Recently posted . 1K views
Recently posted . 1K views . 94 min read
Recently posted . 1K views . 34 min read
Former Prime Minister Dr Manmohan Singh writes to PM Modi requesting him not to disturb Nehru Memorial Museum and Library
Recently posted. 591 views . 0 min read
A choice between private vendors Haldiram and Bikanerwala to run the Parliament canteen would mean that only vegetarian fare would be available to MPs since both ea...
Recently posted. 408 views . 1 min read