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Indian rupee hits all-time low

In this Nov. 11, 2016 file photo, a shopkeeper prepares a garland with Indian 10 Rupees denomination notes, used particularly to garland grooms on their wedding day, in Jammu, India.
In this Nov. 11, 2016 file photo, a shopkeeper prepares a garland with Indian 10 Rupees denomination notes, used particularly to garland grooms on their wedding day, in Jammu, India. AP Photo/Channi Anand

The rupee on Monday touched an all-time low of 69.62 per dollar in early trade, tracking broader weakness in other emerging market currencies on concerns of a spill-over from a crisis-hit Turkey.

The Reserve Bank of India was seen intervening to stem a sharp fall in the rupee, two dealers said.

READ MORE: Why the Turkish lira is tumbling, and why other economies are worried

“The RBI was there to curtail the volatility in early trade, but not in a big way,” said a senior dealer at a foreign bank.

The rupee reversed marginally from its record lows to trade at 69.53 to the dollar. It had ended at 68.84 to the dollar on Friday. The 10-year benchmark bond yield rose to 7.80 per cent from its previous close of 7.75 per cent, tracking the weakness in rupee.

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Investors preferred safe-havens such as the U.S. dollar and the yen after a plunge in the Turkish Lira sent all emerging market currencies sharply lower.

The lira has fallen about 45 per cent against the greenback this year on worries over Turkish President Tayyip Erdogan’s increasing control of the economy and a deepening diplomatic rift with the United States.

“There is no point spending a lot of dollars in defending a rupee when the force of the fall is so strong across emerging markets,” said a senior forex dealer at an Indian state-run bank.

The next crucial level for the rupee is 69.80 to the dollar, he added.

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Traders will also watch out for India consumer inflation data for July due after market hours for further direction. A Reuters poll estimates July inflation of 4.51 per cent compared with a five-month high of 5.0 per cent hit in the previous month.

Subhash Chandra Garg, secretary at the department of economic affairs, said the rupee was still performing better than some other currencies, and that the country had sufficient foreign exchange reserves.

READ MORE: Turkey’s currency drops after Trump announces hikes on aluminum, steel tariffs

“As currencies of other economies are also depreciating, intervention by the Reserve Bank of India, by selling dollars in the country, will not help much at this stage for stabilising the rupee,” Garg told reporters.

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“Even if the rupee falls to 80, it will not be a concern provided all other currencies depreciate.”

He said the RBI has spent about $23 billion so far to intervene in the market.