The Rupee has registered the biggest daily fall today after 1993, as it fell by 3.9 percent to 68.75 as currency crisis deepens. The currency has marginally edged back to 68.31 after invisible dollar selling intervention by the RBI. Foreign investors sold heavily in the debt and equity market fearing further loss due to weakening of the currency.
With the present fall, the rupee became the worst affected among the emerging market currencies beating the Turkish Lira. In the last three months, the Indian currency has lost its value by nearly 23 per cent.
Adverse news from overseas especially mounting pressure on the Syrian issue strengthened rupee fall expectations for the near future. The Syrian issue has already fuelled crudes’ upward journey. Crude’s new momentum with the support of another Middle East confrontation is making India’s trade situation bad to worse. It is expected that the government should quickly correct the domestic fuel prices in accordance with the falling rupee and rising crude. This means another wave of price rise is awaiting the Indian fuel customers.
So far, the clueless government and armless RBI were largely unoccupied with the rupee supporting measures. Two days back, Brazil came with a major currency support programme worth $ 60 bn. This has rescued major emerging market currencies temporarily. Today’s fall is a steep one for Rupee, resembling the currency crisis happened in East Asia in 1997. Hence it is expected that when the domestic currency hits some psychologically appealing mark like 70 per dollar, the RBI may come out with some serious dollar selling which alone can quickly arrest the currency’s fall.