Rupee hits a new low of 72.73/$; analysts see more pain ahead

The rupee on Tuesday hit a new lifetime low of 72.73 in the intraday trade against the US dollar. However, it recovered later and was trading at 72.60 at 03:52 pm. 

The domestic currency opened at 72.30, up 15 paise against yesterday's close of 72.45. The Indian unit on Monday plunged 71 paise or 0.98 per cent on rising crude prices and a widening current account deficit (CAD). 

In other economic data, India’s current account deficit (CAD) widened to 2.4 per cent of gross domestic product (GDP) in April-June period on the back of rising crude oil prices, from 1.9 per cent of GDP in the January-March quarter of 2017-18, according to data released by the Reserve Bank of India (RBI).

Marc Faber, Editor and Publisher of ‘The Gloom, Boom & Doom Report’, in an exclusive interaction with Business Standard said the pain in the domestic currency will continue going forward. "I think the rupee will continue to go down, trend-wise. In the near-term, however, it appears oversold and has slipped over 10 per cent against the US dollar this year. I am sure the rupee will go over 100 levels. But, will it go over this level in six months or in 10 years is debatable," Faber said. READ THE FULL INTERVIEW HERE

“We expect that the rupee could continue to feel the pain in the short term and intervention could restrict the pace but bias for the rupee is still negative. Rupee, in the short term, could test levels of 73.20 and break above 72.15 could negate the view for short-term weakness," Gaurang Somaiya, Currency Analyst, MOFSL was quoted as saying by PTI.

Meanwhile, the rupee pain continued to spook investors on Dalal Street as the benchmark indices slipped over 1 per cent on Tuesday. The S&P BSE Sensex ended 509 points, or 1.34 per cent, lower at 37,413 levels with Tata Steel (down 3.46 per cent) the worst performer. Coal India, Infosys and NTPC, however, bucked the trend and ended with marginal gains.

NSE's Nifty50 index tanked 150.60 points, or 1.32 per cent, to settle at 11,287 levels, with 44 constituents ending in the red and six in the green.