The rupee rout continues as the currency is set to decisively fall below the crucial 80 per US dollar mark in trade. The rupee on Wednesday briefly breached the 80 mark but settle to close at recor low - 4th session in a row at 79.90/$.
It is not the rupee that is suffering but rather the US greenback that is gaining. The dollar dominance has been exaggerated by fast rising rates by the US Fed and the global slowdown. The result a general risk aversion and foriegn investors pulling money out of 'hot spot' markets such as India.
In just this year FIIs have pulled out over $29 billion dollars from the markets, outstripping the exits during the 2008 financial crisis. But India is not alone in the losers club vs the dollar, Euro now at parity sits at a 20 year low, the Japanese yen has tumbled to its lowest level in 24 years vs the dollar.
The bets however expect a little more pain as the Fed is set to tighten rates by a historic 100 bps at its July 26-27 meet pushing the dollar even higher.