Rupee plunges to record low as current account deficit widens to 5-yr high

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 72.5587, leading declines among Asia’s emerging-market currencies. The benchmark 10-year bond yield gained 11 basis points to 8.14 per cent, while stocks also declined.

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.

Most companies, barring a few, can withstand ongoing rupee fall: Report

Most domestic corporates, barring a few, can withstand the ongoing rupee plunge as the share of their dollar-linked earnings largely balance the share of their greenback-denominated debt, says a report.

The rupee fell beyond Rs 70 to the dollar, closing at an all-time low on Thursday at 70.15, while today the market was closed. So far, the rupee has lost close to 9 per cent, making it one of the worst performers among the large currencies.

"A weaker and more volatile rupee would likely result in increased hedging costs for companies, while the same may benefit exporters," an S&P report said on Friday.

"Most corporates can withstand the rupee plunge as the share of their dollar-linked earnings largely balance the share of their greenback-denominated debt. A few of them will be negatively affected, but not severe enough to impact their credit ratings," S&P said.

Looking to buy a Mercedes-Benz? You'll have to pay up to 4% more from Sept

German luxury carmaker Mercedes-Benz on Thursday said it will hike prices of its vehicles across models by up to 4 per cent from September to offset adverse impacts of rising input costs and upward forex movement.

The rising inflation due to geopolitical dynamics, coupled with rising input costs and increasing forex rates has been exerting significant pressure on overall operations, Mercedes-Benz India said in a statement.

While the rupee has depreciated by more than 5 per cent against the Euro in last eight months, the repo rate has gone up by 0.5 per cent in the last couple of months, it added.

"The combination of all these factors led Mercedes-Benz India to upwardly revise the prices of its entire model range and also the retail finance rates," it said.

The upward revision of the price across the entire model range will be effective from September 1, 2018, and would be up to 4 per cent depending on the model, the company said.