India’s rupee plunges to record low versus dollar, dirham

India’s rupee plunged to a new record low on Tuesday, dropping to 61.80 to the US dollar and Dh16.83 to the UAE dirham before paring some of the losses in late trade as the government announced the appointment of noted economist Raghuram Rajan as the new governor of the Reserve Bank of India (RBI).

Tuesday’s fall erased the INR’s previous all-time low of 61.21 versus the greenback on July 8. The Indian currency has fallen as much as 12.7 per cent since the start of May as the country grapples to bring down its ballooning current account deficit and boost its flagging annual GDP growth rate, factors that have seen foreign institutional investors dumping rupee-denominated assets in favour of the greenback in recent months.

The double whammy of slowing growth and depreciating currency have raised India’s import bill, primarily oil. India meets more than 70 per cent of its crude oil needs from imports, a trade which is dollar-denominated.