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![Following the recall of the outlawed 500 and 1,000 rupee notes, India is now coping with a weakened rupee amid foreign cash outflow [Xinhua]](http://thebricspost.com/wp-content/uploads/2016/11/260407382_81.jpg)
Following the recall of the outlawed 500 and 1,000 rupee notes, India is now coping with a weakened rupee amid foreign cash outflow [Xinhua]
In India, the rupee plummeted another 0.4 per cent on Thursday extending losses throughout November.
It neared its record low of 68.86 to the dollar around midday in Delhi trading but intervention from the Reserve Bank of India appears to have kicked in as the rupee gained some ground to 67.76 at 2:20 local time.
But a short 12 minutes later, the dollar began to surge again. At closing, it eased to 67.7250.
The story is pretty much the same in other emerging markets.
Following strong economic data about the US economy, the Mexican peso – which had drastically fallen when it appeared Trump had won the election on November 8 – has in the past two weeks plummeted to its lowest level in a year.
At press time, it had eased somewhat to 20.7239 to the dollar.
The Turkish lira, which has been slowly falling against the US dollar, also suffered a drop to its lowest level in five years at 3.4056 to the dollar.
Emerging economy currencies are also likely to suffer increased cash outflow now that a Fed hike looks all but certain in December. This would put pressure on central banks to inject more dollars to stabilize markets.
The RBI has in recent weeks been instructing state-owned banks to sell dollars to offset the outflow.
That would mimic a similar scenario in 2014 when cash outflows from emerging markets reached hundreds of billions of dollars as the Federal Reserve began to gradually cut back on its then $85 billion quantitative easing scheme.
The BRICS Post with inputs from Agencies
