The government today said the rupee was likely to remain in the range of 68-70 to the dollar, as the Indian currency plunged to an all-time closing low of 70.59 against the US currency.
The local currency dropped by 49 paise or 0.70 per cent at close, its biggest single-day drop since August 13 when it nosedived 110 paise or 1.6 per cent, at the interbank foreign exchange market today.
The rupee had earlier hit its all-time closing low of 70.16 on Monday.
"There is some small mismatch in demand and supply which plays one way or the other depending upon the view that operators take. But some changes have happened which are material. Foreign portfolio investors took out USD 9 billion from the country in the first three months," Economic Affairs Secretary S C Garg said while replying to queries on rupee value.
In July, he said the net flow was same so there was no inflow or outflow of money.
So far in this month there is a positive inflow of over USD 1 billion.
"So that suggests the sentimental change about the view on rupee that the current variables are fairly stable level, right level. And therefore, it gives me some confidence that where we are today there may not be much variation.
"So I retain the same view that between 68-70 is the level the rupee would mostly remain...But considering fundamental supply of dollars and the demand it should be fair to assume that that might be the level on an average during the year," said the Secretary in the Department of Economic Affairs (DEA).
Meanwhile, currency dealers said that consistent dollar demand from banks and importers, mainly oil refiners, following higher crude oil prices, kept the rupee under pressure.
Furthermore, dollar's strength against some currencies overseas and firming crude oil prices also put pressure on the rupee, dealers said.
At the interbank foreign exchange market, the rupee opened lower at 70.32 a dollar against 70.10 previously and dropped further to a new low of 70.65 in afternoon deals, down by 55 paise.
Overseas, the US dollar inched higher against a basket of currencies in early Asian trade, after dipping to a four-week low overnight. Relief over the US-Mexico trade deal was dimmed by concerns that the China-US trade war will drag on for some time.
A sharp surge in trade deficit too impacted the rupee. Trade deficit soared to a near five-year high of USD 18 billion.
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