A new all-time low: Rupee at 70 a dollar now, but let us be reasonable

A new all-time low: Rupee at 70 a dollar now, but let us be reasonable

A new all-time low: Rupee at 70 a dollar now, but let us be reasonable on Business Standard.

The present problem is ostensibly caused by the Turkey-US diplomatic imbroglio. Such issues can snowball into something more serious; so it will be difficult to guess when the issue will get resolved

Latest News The rupee has already plunged under 70 to a dollar. How much more? The question is very relevant, now that the rupee has breached that psychological mark. Just a week ago, one thought the rupee rate would settle in the range of 68-69 a dollar; but the currency suddenly gravitated towards and then under 70.

Curiously, the Reserve Bank of India (RBI) had mentioned in its last credit policy that trade wars were a major concern. But the concept of trade wars has assumed another dimension now, going beyond the US and China.

The present problem has been caused ostensibly due to the imbroglio in the diplomatic issues involving Turkey vis-Ă vis USA. The fact is that the USA is

using the concept of higher tariffs or ban on imports as a way of controlling not just economic but also political concerns.

Hence, sanctions on Iran or the present disenchantment with Turkey (an American pastor is imprisoned in Turkey) has been settled on the basis of sanctions and tariffs. The fallout is also that these issues can snowball into something more serious as there could be threats to other countries to desist from dealing with the targeted nation, which in this case can be Turkey or Iran earlier. It is for this reason that the tensions can be long lasting and it will be difficult to guess when the issue will get resolved.

The market behaviour tends to get volatile as a collateral effect of such a phenomenon which can be felt across the world. This is the major reason why the rupee has been going down.

Therefore, volatility is here to stay, at least for a while, and it will be hard to say when the normalcy will return. It could be a couple of trading sessions or a longer period of time.

READ MORE Source: - BS