Rupee slides toward year's low against dollar as trade deficit widens

The Reserve Bank of India also has $600 billion of currency reserves to draw on to curb any sharp fall in the rupee

After months of wild volatility in the rupee, India’s widening trade deficit and elevated commodity prices are bearing down on the currency, reinforcing a recent downward bias and pushing it toward a new low for the year.

That’s the view of traders who’ve seen the rupee whipsaw from being Asia’s best performer in the first quarter to its worst in April when another wave of Covid-19 infections took hold.

This volatility and the prospect of tapering by the Federal Reserve have also reduced the attractiveness of India’s currency for carry trades, adding to its headwinds.

“We expect oil