Rupee Crashes Further Against A Surging Dollar On Global Recession Fears

The rupee crashed early on Friday against a surging dollar on expectations of a jumbo-sized Federal Reserve rate hike next week and warnings from big world institutions of a recession in major economies.

Bloomberg quoted the rupee last at 79.8075 against the greenback after opening at 79.7962, compared to Thursday's close of 79.7012, fast approaching the psychologically key level of 80 per dollar. 

PTI said the rupee fell 11 paise to 79.82 against the US dollar.

Adding to the rupee's troubles was a crash in domestic equity benchmarks.

While the dollar was slightly off its multi-year highs hit earlier this week, demand for the greenback remained robust due to predictions that the Fed would need to raise interest rates further to keep inflation under control.

The offshore yuan was forced to breach the crucial 7 per dollar level for the first time in more than two years driven by a rampant dollar, and it remained under pressure at 7.0032 in early Asian trade. The onshore unit yesterday closed at 6.9971 per dollar while teetering perilously near to the breakpoint.

"The dollar strength will persist, at least in the near term. The two key factors that are supporting the U.S. dollar are still in place, so we've got very hawkish market pricing for the FOMC...and also, we've got this worsening global growth outlook," Carol Kong, senior associate for international economics and currency strategy at Commonwealth Bank of Australia, told Reuters.

"As long as the prospect for the global economy is still weak, the US dollar can remain strong and perhaps edge a little bit higher."

The International Monetary Fund and the World Bank warned that major central banks around the world could hike their way into a recession.