Rupee slides to 68.22, here’s why

The rupee plunged by 30 paise and touched 68.22 against US dollar. This was following strong dollar demand and investment outflows from the country against the backdrop of buoyant dollar sentiment largely kept home currency under immense pressure.

Besides, the rupee also plummeted due to demand for the American unit from importers and corporates.

Indian bourses had a softer start to 2017 as equities were buffeted by concerns surrounding over the post demonetisation drive and upcoming Q3 corporate earnings outlook.

The domestic currency resumed on a weak note at 67.95 from last Friday's closing level of 67.92 in an extremely quiet trade at the Interbank Foreign Exchange Market.

But it witnessed a sudden bout of volatility in mid- afternoon deals and drifted down to hit an intra-day low of 68.25 before ending at 68.22, revealing a steep loss of 30 paise, or 0.44 per cent.

Meanwhile, the rupee finished the year-2016 with a 2.68 percent annual fall, scripting its sixth consecutive years of decline against the greenback.

A large part of the outperformance was attributed to heavy capital outflows during the fag-end of the year, although it rebounded after plunging to historic lows.

Hedge funds and overseas investors have pulled out a massive USD 4 billion from the Indian capital market in December following rate hike by the US Federal Reserve.