The Indian rupee on Tuesday morning fell to a record low of 70 against the US dollar. The cause of this fall has been attributed to fears over a rise in global protectionist measures, along with a strong US economy.
This is the steepest fall for the Indian rupee since September 2013. The rupee has been on the downslide since the beginning of this year and has slipped around 9% in 2018.
According to news agency PTI, the ongoing currency turmoil in Turkey has dampened investors' sentiments globally. Investors are turning to the dollar as a safe haven with Turkey’s currency lira crisis continuing since the last week.
Around 11 am, the rupee plunged to Rs 70.08 to a US dollar. However, soon afterwards, the Reserve Bank of India (RBI) is said to have intervened in the open market to curb the rupee's free fall.
The intervention aided the rupee stabilise just a tad below 70 to a USD at 69.98 around 11.05 a.m.
"There is nothing to worry at this stage. The rupee is depreciating due to external factors which may ease as we go forward," Economic Affairs Secretary Subhash Chandra Garg told news agency ANI.
Reports suggest heavy sell-off in global currencies, including Turkish lira, fuelled demand for safe-haven assets and caused the rupee to nosedive. The weakness of the Turkish lira has strained market currencies in Asia.
According to NDTV, analysts have stated that crisis has been pending for a while and reflects Turkey's refusal to raise interest rates to curb double-digit inflation and cool an overheated economy.
On Monday, the rupee had sunk to 69.93, plunging by Rs 1.08 amid fears that the crisis in Turkey could manifest into a global financial crisis.
In a ray of hope, however, last month retail inflation fell to a nine-month low of 4.17% on declining vegetable prices. This could prompt Reserve Bank to pause interest rate hike in its next monetary policy review, a PTI report states.
(With inputs from IANS)