The rupee registered a sharp declineof 109 paise to close at69.93 against the US dollar on Monday.
That marked the Indian currency's all-time closing low against the greenback.Other emerging market currencies plunged as investors preferred safe-havens such as the US dollar and the yen after a plunge in the Turkish Lira.The rupee traded in the range of69.93-69.41 against the American currency before closingat the day's lowest point.
The rupee had settled at68.84 against the US dollar last Friday.Analysts attributed the plunge in the rupee to the Turkish currency crisis and expect the rupee to fall further to below 70 per dollar."The current drop in rupee is mainly due to the crisis in Turkey.
Dollar index has strengthened beyond 96 levels reflecting its safe haven status due to possible domino effect of the Turkey crisis on the other financial institutions," Salil Datar, CEO and executive director, Essel Finance Forex, told TheIndianSubcontinent."Given the prevailing risk aversion in the global markets, we don't rule out that the rupee will briefly cross 70/dollar before retracing to 69/dollar levels," saidAditi Nayar,principal economist at credit ratings agency ICRA.Going forward, analysts will closely watch the movement of emerging market currencies against the US dollar and crude oil prices.The Reserve Bank of India was seen intervening to stem a sharp fall in the rupee, news agency Reuters cited two dealers as saying.The RBI is likely to assess the trend in the rupee vis-a-vis the emerging markets currency pack, Ms Nayar said.The lira has fallen about 45 per cent against the US dollar so far this year on worries over Turkish President Tayyip Erdogan's increasing control of the economy and a deepening diplomatic rift with the US."If all EM currencies are depreciating, the rupee must weaken to protect export competitiveness," Ms Nayar added."The rupee can see further dip till 70.25 levels on the other side, we could be seeing 69.60 levels if today's favourable inflation data is backed by a moderation in the awaited trade deficit figures," Mr Datar further said.(With agency inputs)