If we look at the live movement of the rupee traded on the NSE and Dubai Gold Currency Exchange (DGCX) it indicates that the rupee will break its lifetime low of Rs68.84 as witnessed on September 3 2013 against the dollar.

In periods of pronounced risk aversion we do see investors simultaneously selling winners as well as losers. While India is considered as a stable economy in the global financial market if its foreign exchange reserve depletes further and if crude oil prices stop declining then the rupee is most likely to weaken further. In fact it would not be a surprise if it becomes weaker than the intraday low witnessed on August 28 2013 i.e. Rs68.845 and crosses Rs70 level within a short period. A similar mentality prevailed among Indian currency dealers when the rupee touched its 29 month low at 68.462 in the last week of February 2016.

Even as crude oil prices came crashing the Indian rupee hasn't received any relief. Considering India is a major global crude oil importer the prediction in 2014 by major banks was that the rupee would become stronger by six per cent during 2015. However in fact it declined by 4.7 per cent and during the current year it has crashed by 3.06 per cent till date in 2016. Investors have lost faith on the capacity of the new government to bring about major economic reforms besides solving the Goods and Services tax logjam in parliament.

That is precisely why the Indian rupee has suffered excessive loss in the recent emerging market sell-off spree. During the current year we have witnessed foreign investors withdraw investment approximately worth $2.15 billion from the stock-market till date. Now as the recently presented union budget provides strong indications of further economic progress we believe that the rupee will guide from two sides with possibilities of several changes.

The decline by the Indian rupee against the US dollar is not exceptional and the currency is performing relatively well. While the Indian rupee had declined by 6.5 per cent against the US dollar since last April it has actually risen against the euro and the yen while holding its own against the sterling. Recently at the annual World Economic Forum meeting at Davos RBI Governor Raghuram Rajan said that the rupee has been relatively strong as compared with other emerging market currencies.

After the initial volatility things will stabilise. People will try and look for strong and stable emerging markets. India is one of them. The growth is pretty good and all the other indicators seem to be going well. Although foreign investors resorted to a sell-off they purchased bonds worth $320.6 million against it. Further against this backdrop the rupee has performed well amidst the weakness of global risk management. The rupee will become stable after the market normalises.

Among the Brics Brazil and Russia have slipped into recession while the growth rate of China is declining dramatically. Though global commodity prices are at the bottom a financial crisis has not emerged in India as the country is a major commodity importer. However with global recession becoming widespread India's export demand will also decline which would create a negative impact on the currency. The US is likely to increase interest rates in coming months which may bring the currencies of emerging economies under more pressure. During such a difficult period smart money would be attracted towards safe havens such as gold and the USD.

The writer is manager for Commodities Market Emirates NBD Securities. Views expressed by the author are his own and do not reflect the newspaper's policy.