Rupee breaches 70/$ as investors turn jittery over Turkish currency turmoil

Rupee breaches 70/$ as investors turn jittery over Turkish currency turmoil

Rupee breaches 70/$ as investors turn jittery over Turkish currency turmoil

The fall in the rupee is leading to a widening of India's current account deficit, when the value of imports exceeds the value of exports, they say. At 1.15 pm, the rupee was trading at 69.90 per dollar.

The rupee on Monday touched an all-time low of 69.62 per dollar in early trade, tracking broader weakness in other emerging market currencies on concerns of a spill-over from a crisis-hit Turkey. It had opened marginally higher at 69.85 against the greenback on Tuesday morning.

"Over the near term, trend of USD/INR will be dictated by Turkish lira and Euro/USD".

Technical pattern indicates that the rupee could further depreciate towards 71 per dollar.

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The currency crisis in Turkey, which had a massive impact on Asian markets on Monday, began after President Recep Tayyip Erdogan asked citizens to exchange gold and dollars into the lira as the country's currency dropped almost 19% due to worsening relations with the United States.

Reportedly, the rupee has lost 7.2 percent this year and remains one of the worst performing emerging market currencies. Apart from the US-China led trade rhetoric's, he said the US Federal Reserve's reiteration of its steady rate path and the emerging concerns around major European banks' exposure in Turkey have added another layer of uncertainty in the markets.

Meanwhile, some analysts also attribute it to domestic factors at play. "However, July CPI coming in at 4.17 per cent will relieve some pressure on interest rates and the rupee in the near term", said Deepak Jasani, Head of Retail Research at HDFC Securities. There is lot of panic demand seen from importers...the next short-term resistance is seen at 70.50, while the important resistance to watch out for the market will be 71 per dollar.

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