The Indian Rupee recovered as much as 10 paise at 70.15 against the US dollar from today's opening of 70.25. In the morning session, the currency hit a new all-time low of 70.32 against the dollar.
A strong demand for the American currency in the overseas market has hurt the rupee and currencies of other emerging economies. The fall will also impact the widening trade deficit of the Indian economy. At this rate, crude oil import bill is likely to jump by about $26 billion in 2018-19. Data released by the commerce ministry this week showed that the trade deficit had already soared to a near five-year high of $18 billion.
After the Trump administration double tariffs on Turkish steel and aluminium imports, Turkey's lira tumbled, dragging the rupee with it. The impact is largely due to the fact the investors are preferring the dollar over others as the strength of the US economy is highly stable unlike emerging economies like Turkey, India or China. Provisional data showed that Foreign institutional investors (FIIs) sold shares worth a net of Rs 378.84 crore on Tuesday.
Meanwhile, Niti Aayog vice chairman Rajiv Kumar at a NABARD event said that the falling rupee is not a cause of worry as it is getting back to its natural value. "The rupee rose by about 17 per cent during the last three years. Since the beginning of this year, rupee has declined by only 9.8 per cent. So, it has recovered. It is rather coming back to its natural value," according to a PTI report.