The rupee can touch 70 to the US dollar by December-end. According to an ET poll, the rupee may slump to a new low this year amid global policy uncertainties. Nearly three-fourths of the respondents believe the local unit could touch 69 to the dollar with some even pointing to 70 by December-end.
The rupee is one of the worst-performing emerging market currencies this year, having lost about 6.7 per cent to the greenback to close at 68.13 on Monday.
In February too, an ET poll showed that the rupee may weaken beyond Rs 70 to the dollar by the end of the year. Deutsche Bank, DBS Bank, Bank of America, Yes Bank, IFA Global and Edelweiss Financial Services were among those predicting the local currency to hit the 70-mark or fall beyond it.
How it's bad
A weak rupee against the dollar makes imports costlier. Some imports cannot be cut down such as oil, which can negatively affect India's current account deficit. In a vicious cycle, a depreciated rupee makes oil NSE -1.51 % costlier since its India's chief import. Costlier oil means costlier vegetables and groceries since transportation costs go up. Weak rupee also makes education and holidays in foreign countries more expensive. The goods that use imported components such as computers, smartphones and cars also get more expensive. All import-based industry and trade suffers.
A weak rupee is good for exporters since they get more money for their exports. All export-based industry benefits from a weak rupee. For example, information technology and pharma companies benefit from a weak rupee since most of their revenues come from foreign countries.