Indian rupee slips to weakest, traders say 69 per dollar is a critical level

MUMBAI: The Indian rupee slipped to its weakest on Wednesday, falling to 68.68 to the dollar. This is its lowest since November 29 last year, making it a 0.62 percent decline so far in the day from its previous close of 68.25. 

The rupee has fallen by nearly 7 percent so far this year, as dependence on oil imports has exposed the economy to risks of higher crude prices. Traders said 69 per dollar was a critical level and beyond that the rupee could depreciate faster unless the Reserve Bank of India (RBI) intervened aggressively.

India imports more than two-thirds of its crude requirements. High oil prices will stoke inflation and widen the country's current account deficit, adding to more selling pressure on the fragile rupee that risks destabilising the broader economy. Brent crude was up 30 cents a barrel at $76.61 by 0800 GMT (1:30 pm). US light crude was 25 cents higher at $70.78.

"If the rupee continues to depreciate, it could trigger dollar outflows from the equity market, which can put pressure on the currency, current account deficit and could even push the balance of payments to a deficit," said Sajal Gupta, head of forex and rates at Edelweiss Securities. "Apart from oil, the rupee is also correcting after appreciating at a fast pace last year. But what remains to be seen is the RBI's tolerance band in terms of volatility," said a dealer at a foreign bank.