The rupee on Wednesday plunged 49 paise, or 0.70 per cent, to close at a historic low of 70.59 against the US currency due to strong month-end dollar demand from oil importers, foreign fund outflows and worries over fiscal and current account deficits.
The currency hit a record intra-day low of 70.65 during the day as investors finally hit the panic button after reports highlighted risks of India breaching the 3.3 per cent fiscal deficit target for 2018-19. The fall was triggered by factors like high crude prices and concerns over widening current account deficit (CAD).
The rupee has fallen 10 per cent this year so far, making it the worst-performing currency in Asia.
Credit rating agency Moody’s Investors Service said there are risks of India breaching the 3.3 per cent fiscal deficit target for the current financial year as higher oil prices will add to short-term fiscal pressures. On the energy front, crude prices traded marginally up supported by news of a fall in Iranian crude supplies as US sanctions deter buyers. Benchmark Brent crude oil was trading at $76.47 a barrel in early trade. Globally, the dollar bounced back as relief about a US-Mexico trade deal gave way to concern among investors that the conflict over trade between the US and China was not about to end soon.
Meanwhile, the Sensex on Wednesday dropped by 173 points, snapping its two-day record-closing run largely due to losses in key energy stocks of Reliance Industries and Coal India. The 30-share index hit an all-time intra-day high of 38,989.65 at the outset but the market lost steam as investors preferred to book gains after the recent rally.
The BSE barometer touched a low of 38,679.57 points towards the fag-end before settling at 38,722.93 points, down by 173.70 points, or 0.45 per cent over the last close. The NSE Nifty index in choppy movements finished lower by 46.60 points or 0.40 per cent at 11,691.90. Intra-day, it hit a high of 11,753.20 and a low of 11,678.85. The Nifty had risen by 181.40 points or 1.54 per cent in the past two days.