Rupee hits record low as fuel prices touch fresh highs

Rupee hits record low as fuel prices touch fresh highs

Rupee hits record low as fuel prices touch fresh highs

It had closed at 73.3350 on Wednesday.

Yesterday, the rupee recovered to 73.04 to a USA dollar after touching an all-time low after the RBI intervention.

"Markets are in a panic right now, they are probably pricing in more rate hikes than what the MPC can deliver", a senior debt trader at a private bank said. Weaker long-term sentiment has weighed on the won, which is closely tied to China though Korea's electronics exports, which may be at risk from the US-China trade war. And dollar selling by the RBI to support the rupee has put a further squeeze on rupee liquidity.

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On Wednesday the rupee slipped to a low of 73.42 per dollar as crude oil prices breached the 85 USA dollars per barrel mark, leading to huge outflows of cash. Indonesia's central bank governor stressed the need to raise interest rates before the Fed to avoid "drastic" capital outflows in the wake of a heavily flagged Fed hike in December.

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 auctions to purchase government bonds as part of the open market operations will be conducted in the second, third and fourth week of October.

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.

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In the share markets, the broader NSE index was down 1.95 percent at 10,647 as of 0713 GMT, hitting its lowest level since July 3.

The benchmark indices settled almost 1 per cent higher on Monday led by gains in the information technology (IT) and banking stocks.

The rupee has plunged by more than 4 per cent in over a month.

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