Rupee sees record closing low of 68.93 against dollar

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The rupee on Thursday ended at its lowest close ever after Chief Economic Advisor Arvind Subramanian commented that the rupee should be allowed to depreciate, when its peers are also coming under pressure.

A firm oil price continues to weigh on sentiments, even as the dollar showed some signs of easing up against major currencies. The tariff war imposed by the US on Chinese goods, estimated at $34 billion starting Friday, has forced the Chinese currency to depreciate. As a result, all other emerging markets are letting their currencies depreciate to protect export competitiveness. The rupee is no exception to this rule.

The partially convertible currency closed at 68.93 a dollar, its lowest close. The lowest level of the rupee was reached in intraday trade on June 28. The currency is expected to cross 70 a dollar, but should strengthen back if oil supplies increase and the European Central Bank starts hiking rates.

But before that, the rupee could test levels beyond 70 a dollar level too. DBS Bank expects the rupee to hit 71 a dollar. Barclays PLC expects the local currency to go to 72.

The rupee would have reached those levels by now had the central bank not intervened, which it is doing on a regular basis, say currency dealers.

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