Published: Thu, May 17, 2018
Business | By Tara Barton

Rupee slips to 16-month low, gains foothold with RBI help

Rupee slips to 16-month low, gains foothold with RBI help

Earlier in the day, the rupee resumed firm at 67.24 from weekend's close of 67.33 at the Interbank Foreign Exchange (Forex) market on bouts of dollar selling by exporters and banks.

Sharply rising U.S. dollar yields have boosted the dollar on worldwide exchanges, and the rupee was also coming under pressure from firm crude oil prices that will weigh on the country's already widening trade deficit.

On Wednesday, the rupee had gained 27 paise at 67.80 against the U.S. currency on suspected RBI intervention to stem further fall in the domestic currency. Brent crude, an global benchmark, was trading at $77.73 a barrel in early Asian trade.

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Hardening prospect of a series US Federal Reserve rate hike this year along with exodus of capital outflows were the other major trigger points exerting pressure on the rupee, a forex dealer said.

On Tuesday, the rupee had plunged to a 16-month low of 68.07 because of various factors that included the polls in Karnataka where the BJP failed to secure a majority. India is vulnerable to rising crude prices. The recent trade deficit on a seasonally adjusted basis was higher than $15 billion.

The local currency, which is the worst performing Asian emerging market currency, bounced back from its low as some local state-run banks sold U.S. dollars on behalf of the central bank, said dealers.

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