The rupee hit a new record low against the dollar, plunging well past 81.50 per dollar on Monday as the greenback rose sharply to multi-year highs against most major currencies on fears of a global recession from the rising borrowing rates worldwide.
Bloomberg quoted the rupee last changing hands at 81.5038 pre dollar, after opening at its weakest level of 81.5225 and hitting a record low of 81.5587, compared to its Friday’s close of 80.9900.
PTI reported that the domestic currency fell 38 paise to an all-time low of 81.47 against the US dollar in early trade.
That is a reflection of investors increasing flight-to-safety bets as Asian markets run the possibility of experiencing crisis-level stress once again, as two of the most significant currencies in the region have collapsed under the assault of unrelenting dollar strength – the yen and the yuan.
Due to the widening gap between the ultra-hawkish Federal Reserve and the dovish policymakers in China and Japan, both the yuan and the yen are falling.
The drop in the yuan (renminbi) and yen is making matters worse for everyone and endangering the region’s reputation as a top destination for risk investors, while other Asian countries are heavily reliant on their foreign exchange reserves to offset the effects of the dollar.
“The renminbi and yen are big anchors and their weakness risks destabilizing currencies to trade and investments in Asia,” Vishnu Varathan, head of economics and strategy at Mizuho Bank told Bloomberg.
“We’re already heading toward global financial crisis levels of stress in some aspects, then the next step would be the Asian financial crisis if losses deepen,” he added.