The rupee reversed early gains to hit the key 65 per dollar mark on Thursday. It hit a low 65.20 per dollar, a two-year low against the greenback. The rupee last traded around these levels in September 2013 when the country was struggling with slow growth and rising deficits.
Reuters citing traders said the Reserve Bank of India likely sold dollars at around the 65 level to slow the rupee's falls.
Selling in the rupee has intensified over the last three days following China's unexpected devaluation of its yuan currency on Tuesday. The devaluation of the yuan has dragged down global equity and currency markets, leading to a sharp selloff in the rupee too.
Yuan's devaluation has sparked fears of a global currency war; analysts say continued depreciation in China's currency will increase the volatility in the rupee, pressure domestic exports and result in dumping of cheap Chinese goods in to India.
"We are part of the global markets and we are responding to what is happening in the global market," said Jamal A. Mecklai, CEO of Mecklai Financial & Commercial Services.
The reversal in the rupee led to a correction in stock markets too. The BSE Sensex, which had surged as much as 280 points in morning trade, ended just 37 points higher at 27,549.
The rupee is now on course for a sixth straight day of loss. As of 4.40 p.m., the rupee traded at 65.17 per dollar
Source:- profit.ndtv.com
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