Indian Rupee falls to 70 per US dollar for first time in history; ‘No worries’, says Economic Affairs Secy

The INR broke the 70 per US dollar mark after opening marginally higher on Tuesday on the interbank foreign exchange market for the first time in history. The rupee to US dollar exchange rate was quoted at 70.08, down 15 paise from the Monday’s closing of 69.9287 per unit US dollar, the Bloomberg data showed. Cushioning the fears of Indian rupee at 70/$, Subhash Chandra Garg, Economic Affairs Secretary said nothing to worry about rupee fall at this stage, the fall in rupee is due to external factors. Within 90 minutes of dealings in the forex market, the rupee regained sharply to a high of 69.72 apiece US dollar.

At the time of updating, the rupee was trading at 69.9012, up 3 paise or 0.04% against US dollar, the Bloomberg data showed. The domestic currency (rupee) recorded heavy depreciation on Monday on the back of the Turkish economic crisis following which a meltdown was observed in most of the Asian currencies. The rupee has fallen about 10% in the current year 2018 so far against the US dollar.

The rupee recoiled in the early session on Tuesday from the record low of Monday following the macroeconomic boost after the CPI-based inflation dropped to a 9-month low at 4.17% in the month of July. Earlier yesterday, the rupee plunged as much as by Rs 1.08, or 1.57% to a record low of 69.91 against the US dollar following the fears that Turkish lira turmoil could turn out into global financial crisis.

Earlier last week, Kaushik Basu, former Chief Economic Advisor said that the Indian rupee is overvalued and the right level of the domestic currency is at 70 to 71 per unit US dollar. Kaushik Basu said that Indian rupee’s exchange rate appreciated in the recent years as the country’s inflation was higher than that in the more industrialised nations. Kaushik Basu praised government’s initiatives such as the implementation of the country’s biggest tax reform – GST and the way of tackling bad loans among the NPA-laden PSU banks but indicated demonetisation as a mistake.

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