New Delhi: The rupee collapsed to a fresh low of 73.77 against the US dollar on Thursday, as global oil prices continued to rise, deepening concerns about the current account deficit and capital outflows. The domestic currency closed at 73.34 on Wednesday.
Consistent dollar demand from importers, mainly oil refiners, following higher crude oil prices, has kept the rupee under pressure.
Meanwhile, state-owned oil marketing companies have been allowed to raise US$ 10 billion from overseas market to meet their working capital needs. Till now, oil marketing companies were not allowed to raise external commercial borrowing (ECB) for working capital needs on a long-term basis. They could raise a maximum of one-year overseas loan by way of buyers credit, repay it within 12 months and raise it again thereafter. Now, the RBI has allowed them to raise ECB of minimum maturity of three or five years.
Also read: Is the Rupee Overvalued or Undervalued?
The international benchmark Brent crude breached the US 86 per barrel level, near its four-year high.
The benchmark Sensex plunged by 527.94 points, or 1.39%, to 35,447.69 in morning deals.
Rupee has been hitting new lows with every passing day over the past few months.
Business Today quoted V.K. Sharma, head private client group and capital market strategy at HDFC Securities as saying, “Indian rupee has depreciated around 11% year-to-date. Higher crude oil prices, demand from defence and oil marketing firms have contributed to the latest bout of weakness. Rupee was overvalued on trade weighted real effective exchange rate. Robust FDI flows in e-commerce companies, healthy forex reserves may limit the downside of the rupee.”
(With PTI inputs)