The weakening currency fell by over 40 paise during the day, triggered by global selloff and sustained capital outflows by foreign funds. The dollar too weakened against major global currencies in the overseas market. Fear of a currency war post yuan’s depreciation in China too added to the trouble. Rupee has depreciated nearly 3 per cent since China started devaluating the yuan.
At 65.95, rupee is at its weakest since September 2013, when India was battling its worst currency turmoil in more than twenty years. In September 2013 the rupee had hit 66.29 per dollar.
The falling rupee triggered panic in the markets. Sensex and Nifty saw a sharp fall as foreign funds sold off their shares aggresively. Sensex slumped 480 points in the morning and the Nifty too fell by about 150 points to breach the 8250 mark. However, both Sensex and Nifty recovered a lot of their day’s losses. The Sensex closed 242 points to finish the day at 27,366.07, its lowest closing in over two months. The Nifty ended the day 72.80 points lower to finally close at 8,299.95. Vedanta was the biggest BSE loser as it slumped 3.81 per cent. Vedanta was followed by Bajaj Auto, Hero MotoCorp and GAIL.
The Indian markets fell also because of the rout in global markets. Asian stocks traded sharply lower. Japan, China, Hong Kong and Taiwan markets were all in the red. The Wall Street closed at a 6-month low late last night. US stocks suffered their worst sell-off in 2015 by falling 2.06 per cent in Thursday’s trade. Global selloff was attributed to rising fear of a slowdown in China, which is the world’s second largest economy.