Rupee breaches 70 against dollar for the first time

The rupee breached the psychological barrier of 70-to-a-dollar for the first time as the sharp fall in the Turkish lira continued to affect all emerging market currencies. The rupee had a strong opening against the dollar at 69.85, but fell sharply to breach the 70-mark and went on to depreciate till 70.08, prompting the central bank to intervene, currency dealers said. On Monday, the rupee declined 1.6% against the dollar to close at 69.93. “The rupee is the victim of a contagion effect impacting all emerging markets triggered by the Turkish crisis,” said B. Prasanna, group executive and head — Global Markets Group, ICICI Bank.

The domestic currency ended the day at 69.89 to a dollar. The rupee is the worst performer in Asia this year, depreciating 9% against the dollar. The current account gap is widening mainly due to a rise in international crude oil prices as India imports more than 80% of its requirements.

‘Optimism on economy’

“The comforting factor, however, is the optimism on domestic macroeconomic fundamentals, optimism on growth and comfort on inflation and fiscal deficit.”

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