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Reasons the rupee has crashed to 2-year low
August 12, 2015, 2:24 pm

The rupee fell to a two-year low of 64.78 on Wednesday following China's devaluation of the Yuan for a second time this week - a move which bankers say is bad news for India's balance of trade.

Here is why rupee has crashed to almost 2-year low:

Appreciation of dollar

The main reason is the appreciation of the dollar overseas after China devalued the yuan for the second straight day.

Devaluation of Yuan to hurt Indian exports to China

According to State Bank of India chairman Arundhati Bhattacharya, the devaluation of the Yuan would hurt Indian exports to China particularly yarn and Iron Ore. "The rupee has remained stable against the dollar even as other emerging market currencies has weakened. This is having an impact on exporters," she said.

Bhattacharya said that her bank has made representations to regulators on providing easier foreign currency financing for exporters to alleviate their problems.A lower opening of the domestic equity market also played spoilsport.

Volatile domestic equity market

A lower opening of the domestic equity market also played spoilsport.

Source: Times of India 

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