Rupee hits lifetime low against dollar and UAE dirham

The Indian rupee and bonds sunk after the current-account deficit widened to the most in five years, as an emerging-market rout raises investor scrutiny of countries with worsening balance of payments.
The rupee tumbled as much as 1.2 per cent Monday, the most in a month, to a record low of INR 72.5587 against the dollar, leading declines among Asia's emerging-market (EM) currencies. The benchmark 10-year bond yield gained 11 basis points to 8.14 percent, while stocks also declined.
In terms of UAE dirhams, the current exchange rate is closer to 20 than ever at INR 19.61 per UAE dirham*. It had touched 19.7 at a point during the day as well. 
Emerging markets have been roughed up in the past month as contagion fears start to spread following a meltdown in the currencies of Argentina and Turkey. India's current-account gap widened in the June quarter to $15.8 billion, hurt by higher payments for oil, data released after market hours on Friday show. 
"Apart from the dollar strength that's weighing on the EM currencies, concerns about financing a wider current-account deficit are also hurting the rupee,"  said Paresh Nayar, the Mumbai-based head of currency and money markets at FirstRand Ltd. At these levels, it remains to be seen if the RBI would support the currency in a big way, he said.
The current-account shortfall represented 2.4 per cent of gross domestic product, more than January-March's 1.9 per cent of GDP, according to the Reserve Bank of India. The worst may be yet to come as the crude import bill for the world's fastest-growing oil user surged 76 per cent in July from a year earlier to $10.2 billion. 
The deficit will probably widen to 2.5 per cent of the GDP for the fiscal year amid rising commodity prices and fund outflows, said Dhananjay Sinha, an analyst at Emkay Global Financial Services. He expects the rupee to weaken further to as low as 75 per dollar and sees the benchmark yield reaching 8.40 per cent.
Global funds sold $601 million of India's bonds this month, more than the combined $459 million that they bought in July and August. Concerns over an oversupply of sovereign bonds had contributed to the selldown earlier this year, and there are little signs of relief. 
The government doesn't see much room to cut its borrowings for the fiscal year, according to people with knowledge of the matter.
The right level for the rupee is 68-70 per dollar, with 72 being "perhaps an outer limit or beyond the reasonable outer limit for depreciation,"  Economic Affairs Secretary Subhash Garg told the Economic Times in an interview. "Those operators who are trying to take advantage of this contagion feeling in emerging markets may come to grief later,"  he said. 
Trending on Twitter
After the Indian rupee fell further on Monday, hashtags #Rupee and #RupeeAt72 were among the top trends on Twitter in India.
Tweeps shared observations about how it was affecting the market and causing inflation.
Many blamed the Bharatiya Janata Party and Indian Prime Minister, Narendra Modi’s bad economic policies. They said that BJP needs to stop blaming the opposition for past failures and pay attention to important issues in the present. 
Twitter user @SatishShekar posted: “Talking of #NewIndia in 2022 by BJP is a long shot. They first have to give us the account for 2014-till date on all sectors. What is more concerning to me is the all-time-high #PetrolDieselPriceHike and all-time-low #RupeeAbove72 and still accuse others #CongressDividingIndia? Seriously!”
Twitter user @mehzkhan added: “Rupiya has fallen like never before in the history of Indian Economy. Must thanks to the regime and it's crony capitalist lobby #Rupee”
Tweep @Cricprabhu jokingly tweeted: “There is a race for 100. Apparently Petrol has gained a pretty big lead.” And @chinu000 replied in a tweet: “Whatever runs for 100, be it petrol or rupee it's a disaster for Indian economy. The people at top may deny it, but, this dash is not at all good for India. #RupeeAbove72 #PetrolAbove80”