Dubai: The Indian rupee is at the 76 plus mark to the dollar barrier for the first time, breaking that barrier early on Monday. It comes just days after breaching the 75 to dollar mark, and puts further pressure on the Indian government to ramp up its response to the free fall of the currency.
After crossing 76, the rupee is now trading in the 75.70-76-10 range. In dirham terms, it was at Rs20.63.
India in fact had been dipping into its dollar reserves to try and arrest the rupee’s decline - in the last seven days or so, it used up more than $5 billion as part of the process. Going by Monday’s activity, this could well continue, with India having a $480 billion plus kitty to dip into.
"Foreign investors are pulling out from the domestic (India) market," said Antony Jos, Executive Director at Joyalukkas Exchange. "The Reserve Bank of India has already taken various steps to curtail volatility... but the sell-off in global markets and strength in the dollar is weighing on the rupee.
"India's foreign exchange reserves have also declined since last week - further actions are indeed possible. But most believe it would happen only tomorrow."
According to the latest data, foreign investors combined took out $10 billion plus from their India exposure.
Adeeb Ahamed, Managing Director at Lulu Financial Group, reckons the rupee will hold between 75.7 to 76.2 against the greenback. "Although the Reserve Bank of India has introduced several positive measures in the last one week, the entire global scenario is vulnerable with countries locking down to contain the virus.
"This has put emerging market currencies such as the rupee under pressure, with investors selling assets and opting for the relative safety of the dollar. This is as expected, and it's difficult to forecast at this stage how things will shape up tomorrow and later this week, with panic growing, and more governments making crucial decisions in line with the evolving situation of the pandemic."