Historic low: Rupee drops further 72.98 against US dollar

What now seems that weakening of rupee is not going to stop in near future and the situation is likely to deteriorate further. The rupee again closed at a new all-time low against the US dollar today, coming under pressure of rising crude oil prices and escalating US-China trade war tensions.

The Indian currency dropped further against the US dollar, to close 46 paise lower at a record 72.97 on Tuesday.

The government had the previous day restated that global phenomena happening because of squeeze on oil production and the US-China trade war led to rupee depreciation. Analysts, on the contrary, hold the opinion that the measures announced by the government last week to support the rupee were particularly disappointing for market participants.

Although achieved gain against the dollar early in the day, the domestic currency dropped to close at 72.9750 against the dollar, after slumping to a record low of 72.99 just before trading ended.

In spite of Reserve Bank of India's intervention rupee's last week's record low of 72.9150 was breached on Tuesday.

According to the Hindustan Times, a source said,“There was no reason for the rupee to fall so much. Crude prices went up and suddenly people started shorting, that shows there’s no confidence in the rupee. The RBI sold about $400 million to $500 million to calm markets, but that didn’t work.”

Another finance ministry source said that the currency could again come under pressure once the new US sanctions on Iran come into force due to a possible rise in oil prices.

Last week, Finance Minister Arun Jaitley had said the country would cut "non-necessary" imports, relax overseas dollar borrowing restrictions for manufacturers and ease rules around banks raising masala bonds, or rupee-denominated overseas bonds.

Indian markets entered the second day of losses in the middle of weakness in Asian peers, with the BSE Sensex closing 294 points lower at 37,290 and the Nifty dropping 98 points to 11,278.