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The Indian rupee (INR) on Monday, August 13 crashed to a record low against US dollar (USD), tumbling 109 paise to close at 69.93: just 7 paise away from 70 a dollar mark.

On Friday, the rupee had closed at 68.84 against the US dollar.

A report in The Economic Times (ET), quoting Gaurang Somaiya, Currency Analyst, Motilal Oswal Securities, said, “Rupee fell to fresh record low levels after Turkey’s widening diplomatic spat with the US prompted fresh turmoil in the market. Strength in the dollar against its major crosses is also weighing on the Asian currencies including the rupee.”

This year, rupee has been among the weakest currencies amongst the Asian peers, and is down by over 7 per cent on year-to-date basis.

The rupee is expected to fall further, beyond 70 a dollar. Mint reported that in a note forex advisory firm IFA Global said, “The psychological 70 mark is now in sight.”

“We expect that weakness for the currency could extend further. However, losses could be capped around 70.80 levels in the short term,” said ET quoting Somaiya.

The slump came as emerging-market currencies weakened amid concern over the risk of contagion from Turkey’s financial-market turmoil.

Investors rushed to safe-havens such as the US dollar and the yen after a plunge in the Turkish Lira sent all emerging market currencies sharply lower. The Sensex also fell sharply today, ending 224 points lower.

In the wake of weakness across the board, “the RBI may be less keen to intervene. It may do so just to curb volatility and desist speculators,” IFA Global was reported to have said.

Turkey’s lira tumbled nearly 45% so far this year largely over worries about President Tayyip Erdogan on the weekend pushed back on raising rates and showed no signs of backing down in a standoff with the US administration.

On Friday, US President Donald Trump imposed higher tariffs on imports from Turkey, with a 20% duty on aluminum and 50% on steel, as tensions mount between the two NATO allies over Ankara’s imprisonment of an evangelical pastor and other diplomatic issues.

So far this year, the rupee has weakened 8.67%, while foreign investors have sold $200.10 million and $5.20 billion in equity and debt markets, respectively.

Other emerging market currencies have also slumped. Turkey’s lira posted its biggest weekly loss in more than 17 years, Russia’s rouble was among the week’s worst performers, falling to a two year low, Chinese yuan extended losses for a ninth week, Malaysian ringgit dropped for an 8th straight week, Brazil’s Rial had its worst week since November 2016, Mexican peso had its worst week since June, Russia’s Rouble lost more than 6%, South African rand weakened past 14 a dollar to the lowest since November, Argentina’s peso lost 6.7% on the week to close at 29.25 a dollar, just shy of record low 29.45 per dollar.

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