Rupee continues its poor performance; hits 72 against UD DollarReuters/Vivek Prakash

The Indian rupee Thursday crashed below the 72-level for the first time ever on persistent global headwinds and concerns on the macroeconomic front.

The domestic currency was quoted 37 paise lower at 72.12 against the US dollar in afternoon trade. 

At the Interbank Foreign Exchange (Forex) market, the local currency opened higher at 71.67 a dollar against its previous record closing of 71.75, but failed to sustain initial strength and fell back to breach the 72-mark. The rupee's unabated fall continued for the sixth straight session Wednesday, hitting yet another closing low of 71.75, down 17 paise against the US currency.

On Wednesday, the domestic unit plummeted to a historic low of 71.97 a dollar in intraday trade before finding some respite. Finance Minister Arun Jaitley Wednesday attributed the fall in the rupee to global factors and stressed that the domestic unit was better off as compared to other currencies.

Forex dealers said besides strong demand for the American currency from importers, concerns about fears of rising fiscal deficit and capital outflows mainly weighed on the domestic currency. Moreover, weakness in emerging currencies overseas against the dollar too weighed on the domestic currency, they added. Meanwhile, international Brent crude futures fell 27 cents, or 0.4 per cent, to USD 77 per barrel.

A fall in crude prices is seen as positive for India, which imports most of its oil requirements, traders said. The BSE Sensex too entered the negative zone by falling 61.11 points, or 0.16 per cent, to 37,957.20 points in afternoon trade.

According to desk, Talking about the fall in Rupee, Jaitley said, "If you look at the domestic economic situation and global situation, there are not domestic reasons attributable to this, but all reasons are global."

Jaitley further said that Rupee is better off than most of what other currencies of the world were nearly four to five years ago. He went on to add that the Reserve Bank of India (RBI) is doing whatever is necessary for the economy. The Finance Minister was of the opinion that raising a hue and cry regarding the fall in Rupee was uncalled for. He said, "I don't think there is any need for the world's fastest-growing economy to come out with panic and knee-jerk reactions."