Rupee gains 15 paise Vs dollar in early trade at 72.30

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Mumbai: The rupee weakened further to hit a fresh low of 72.64 against the USA currency, falling 91 paise in late morning deals on Monday on rising crude oil prices, strengthening dollar and a widened current account deficit.

The rupee opened at a new low of Rs 72.15 against the dollar at the Interbank Foreign Exchange market from its previous close of 71.73.

"First time there was some verbal intervention by government that measures shall be taken to rein in rupee weakness", said Sajal Gupta, head, forex and rates, Edelweiss Securities.

The movement in the value of rupee against dollar since July 15, 2018.

According to the U.S. 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 dollar's strength against rival currencies overseas and fears of a possible escalation in the US-China trade conflict also put pressure on the rupee. Meanwhile, the 30-share BSE Sensex is trading lower by 238.01 points, or 0.62 per cent, at 38,151.81 at 1055 hrs. India VIX rose 7.07 percent to 14.8 indicating further correction in equity markets.

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High oil prices were a spoiler for both the rupee and bonds.

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

Finance Minister Arun Jaitley had last week attributed the fall in rupee to global factors and said that there was no need for panic or knee-jerk reactions.

He said the Reserve Bank was doing whatever is necessary to deal with the situation.

It would have an adverse impact particularly on those entities that generate revenue in rupees, but rely on USA dollar debt to fund their operations and have significant dollar-based costs, including capital expenses, it said.

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