 "FinMin seeks to dissociate rupee plunge from demonetisation")
As the rupee crashed to a 39-month low of 68.84 against a dollar in early trade, the finance ministry attempted to de-link the fall with the demonetisation move and attributed it to the happenings in the US, including an imminent hike in rates by the US Federal Reserve and Donald Trump's victory in the US Presidential election. The minister also said concessions given on using old currency notes of Rs 500 and Rs 1,000 would be phased out in a calibrated manner.
The government is expected to come out with a statement on these concessions, which are expiring on Thursday.
A key finance ministry source said tumbling of the Rupee has nothing to do with withdrawal of old Rs 500 and Rs 1,000 currency notes. Instead, an imminent hike in interest rates by the US Federal Reserve and Donald Trump's ascension as the President-elect of the US has weakened currencies all across Asia as investments are being pulled out from this region, the source said.
As India is in the middle of these Asian indices, the rupee is getting weakened, he added.
The rupee crashed to a nearly 39-month low of 68.84, plummeting by another 28 paise against the US dollar in early trade on Thursday amid sustained foreign fund outflows and the greenback's surge in overseas markets.
Even as the rupee's initial fall was stemmed after an apparent intervention by the Reserve Bank of India, the currency again slipped later in the day to an all-time low of 68.86 a dollar. Before this, the domestic currency had hit its all-time intra-day low of 68.85 and closed at 68.80 on August 28, 2013.
Forex dealers said besides a strong month-end demand for the American currency from importers, continued capital outflows by foreign funds and the dollar's bull run on an imminent hike in rates mainly weighed on the domestic currency.
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Further, a lower opening of the domestic equity market also put pressure on the rupee, they said.
The rupee had shed 31 paise to close at a new nine-month low of 68.56 against the dollar yesterday.
The Indian currency shrunk 2.92 per cent since Donald Trump's victory in the US Presidential polls earlier this month.
The government has been expanding the list of goods and services where payments could be made through old Rs 500 and Rs 1,000 notes.
These included household utility bills, fuel, taxes, fees, purchases from co-operative stores, government hospitals, railway ticketing, metro tickets, public transport, airline ticketing at airports, milk booths, crematoria, burial grounds, petrol pumps and seeds from government agencies.