Rupee hit new low, reached 68.85 against dollar

Mumbai: The rupee on Wednesday collapsed to a lifetime low of 68.85 against the dollar and closed at 68.80, following higher crude oil prices, kept the rupee under pressure.

At the interbank foreign exchange market, the rupee opened at 66.90 a dollar against 66.24 previously and dropped to 68.75 in late morning deals. It recovered some ground in the afternoon after the central bank was said to have intervened but dropped to an all-time intra-day low of 68.85 before ending at 68.80, a fall of 256 paise or 3.86 percent.
Oil prices climbed on fears a military strike against Syria for alleged use of chemical weapons against civilians would disrupt crude supplies from West Asia. Higher oil prices and a declining rupee are a double whammy for India, which imports 80 percent of its crude needs.

The dollar strengthened overseas on likely tapering of bond buying by the US Federal Reserve from next month, putting pressure on the rupee. Sentiment was also hurt by increased capital outflows and fears of a rising subsidy burden with the passage of the Food Security Bill.

The Finance Ministry described the sharp fall in the rupee as a reflection of “irrational sentiment” and said there is no need to panic.

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