No respite yet for the fortunes of the Indian rupee

No respite yet for the fortunes of the Indian rupee

 

On Tuesday, as oil prices hit an all-time high in four years, the Indian rupee further plummeted to touch another record low of 72.9375 against the US dollar. Against the UAE dirham, the currency touched a low of 20.02404. The fall of the currency has been exacerbated in the wake of rising prices of crude oil. The emerging market currencies also remain volatile because of lingering concerns that trade tariffs could be hiked and interest rates could be increased.

The rupee has been one of the worst performing currencies and finds itself in a league of similarly dismal currencies like the Turkish Lira and the Argentine peso. The Reserve Bank of India (RBI) and the federal government have not yet intervened to rescue the embattled currency except to hike import duties and sporadic involvement in the market.

For the time being, investors may have to lower their expectations from the equity market but foreign investors may be in a better position to gauge the consequences of the fall of the currency. This may be a consequence of the depreciation of the currency in the investment matrix.