Rupee weakens further, hits fresh low to 72.64 against United States dollars

A vendor counts rupees at a vegetable market in Mumbai

A vendor counts rupees at a vegetable market in Mumbai

A report by global credit rating agency Moody's Investors Service mentioned that sustained weakening of the rupee was "credit negative" for Indian companies that rely on U.S. dollar debt to fund their operations but generate revenue in rupees.

The rupee on Monday dropped to a record low of Rs 72.49 against the dollar as the United States currency strengthened over positive jobs data.

Currency dealers said the central bank is not intervening aggressively as before. The data for July and August are yet to be released by the central bank.

The rupee started the week at 72.18 against the dollar, losing almost 50 points from its last close at 71.75.


The local currency, Asia's worst performing major so far this year, which plunged as much as 1.3 percent to a record low Monday, pared losses after the comments.

According to the USA agency, weaker credit metrics under a scenario of a further 10 per cent drop in the value of the rupee, from the rate on September 6, can be accommodated in the companies' current rating levels.

The report noted that the finance ministry and the Reserve Bank of India are in touch and that there is a constant intervention of the central bank in the currency market as and when the need arises. "We highlight the risk of another rate hike of 25bp in the remaining part of the fiscal year, contingent on evolving external conditions", it said. The benchmark 10-year bond yield gained 11 basis points to 8.14 per cent, while stocks also declined.

Meanwhile, global rating agency Moody's Investors Service has said that a sustained weakening of the rupee would be credit negative for rated Indian companies, Business Standard reported.

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