MUMBAI: Indian rupee ended at a record closing low against the dollar as an emerging markets (EM) currency selloff and an impending vote of confidence on Prime Minister Narendra Modi government weighed on investor sentiment.The Indian Parliament will debate a no-confidence motion on Friday.
Although there appears to be no real threat to the government, investors would watch the outcome to gauge the ability of the government to take decisions before general elections due next May.Although the ruling party is likely to win, the event has created uncertainty in the currency market, said Param Sharma, chief executive at NSP Forex, a Mumbai-based firm.
Traders have not kept any open positions as volatility will increase on Friday weakening the local unit.The local unit ended at 69.05 a dollar.
The rupee has been the worst performing currency in Asia, extending its losses to 7.5 per cent this year.
In the past one month, the Chinese yuan fell 4.3 per cent against the greenback amid trade war worries between China and the US.The falling pressure may escalate if the weakness in other emerging market currencies continues to worsen, said K N Dey, founder United Financial Consultant, a Mumbai-based forex firm.
Political uncertainties are also giving jitters to overseas investors.EM currencies are weak across the globe with the US dollar gains amid trade war between top trading nations.The rupee hit record low at 69.09 on June 28 earlier this year as elevated crude oil prices threatened to widen Indias fiscal deficit.
A volatile crude oil price is also weakening the rupee.