The Indian rupee has hit an all-time-low

The Indian rupee has hit an all-time-low

Last time, the rupee was at a historic low of 68.86 on November 24, 2016 and a lifetime closing low of 68.80 on August 28, 2013.

Current account deficit is a measurement of a country's trade where the value of its imports exceeds the value of its exports.

India imports more than two-thirds of its fuel needs and higher crude prices pose significant risks for the Indian economy.

The Indian rupee ended at 68.79 per dollar on Thursday, after reaching an all time low earlier in the day, reported news agency IANS.

The rupee recovered from record lows set on Thursday morning aided by dollar selling intervention by the Reserve Bank of India but weak macro-economic fundamentals and broad dollar strength are likely to keep up the downward pressure on it.

The macroeconomic picture of India appears to be caught in a recurring instability against the backdrop of surging global crude prices and consistent widening in the trade deficit as well as increased pressure from capital outflows, all these leading to largely forex market turmoil.

An internal factor that has impacted the rupee includes a massive trade balance deficit and declining level of foreign direct investment (FDI).

The latest bout of weakness has been put down to Indian oil importer buying U.S. dollars to pay for crude cargoes. Unfortunately, that is not the case, as foreign investment in the Indian bond and the rupee markets has slowed down.

The global oil benchmark Brent surged to $77.33 per barrel on Thursday.

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According to analysts, demand for dollar is firm due to recent rise in crude oil prices.

India's foreign exchange reserves stood at $410.07 billion as of June 15, the latest central bank data showed.

And with crude prices screeching higher this week, it's taken its toll on the Indian rupee. While India may not be that fragile now, the country's rupee-dollar exchange rate is still more vulnerable than other peers.

Globally, the dollar was trading near eleven-month high against a basket of the other major currencies.

The local unit, however staged a rebound against the pound sterling to end at 90.05 per pound from 90.45.

Chinese companies have amassed huge levels of United States dollar debts in recent years through bond sales in Hong Kong, according to financial data provider Dealogic.

"For as long as buying the dollar continues to be the trend of the [currency] market, there is very little emerging markets can do to prevent weakness", added Ahmad.

The benchmark six-month forward premium payable in October moved down to 96.50-98.50 paise from 97.50-99.50 paise and the far-forward April 2019 contract edged lower to 243-245 as against 244-246 paise on Wednesday.

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