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Rupee dives to new lifetime low

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Published: 06:13, 10 September 2018   Update: 15:18, 26 July 2020
Rupee dives to new lifetime low

International Desk: The rupee on Monday crashed to a new record low of 72.44 against the US dollar.

The fall in the rupee is due to strong demand for the US currency from importers as the greenback strengthened against other currencies overseas on upbeat US jobs data, forex dealers were quoted as saying in a report by news agency Press Trust of India (PTI).

The domestic currency opened at record low of 72.15 a dollar from its previous close of 71.73. It breached its previous record low of 72.11 hit on September 6.

Here are key things to know about the rupee's movement against the US dollar today:
According to forex dealers, besides strong demand for the American currency, buying by importers, mainly oil refiners in view of surging crude oil prices and capital outflows, weighed on the domestic currency.  

The dollar's strength against its rival currencies overseas amid fears of a possible escalation in the US-China trade conflict too put pressure on the rupee.However, the Reserve Bank of India wasn't seen actively intervening in the foreign exchange markets as it did on Friday, traders said, according to Reuters.

"This depreciation is also in line with emerging market exchange rates which was largely fed in through dollar strength... other factors leading to INR weakening include continuing global trade disputes. Separately, monetary policy announcements by the Fed may have further led to investment re-routing with a derived pressure on INR valuation," said Anis Chakravarty, Lead Economist and Partner, Deloitte India.

The 10-year bond yield rose to its highest level since late-2014 as worries of higher crude prices and weakening rupee bolstered inflation concerns. The 10-year benchmark bond yield rose to 8.12 per cent, its highest since November 28, 2014. The 10-year paper ended at 8.03 per cent on Friday.

On Friday, the rupee rose 26 points to close at 71.76 against the dollar. The rise in the rupee's value against the greenback came after seven days of depreciation.

The Reserve Bank of India (RBI) intervened heavily in the foreign exchange market on Friday, mounting a formidable defence of the 72 rupee to the dollar mark, said a Reuters report.

Meanwhile, benchmark equity indices started the week in the red on Monday amid negative Asian cues. At 9:42 am, the S&P BSE Sensex dropped 171.79 points or 0.45 per cent to trade at 38,218.03. The broader Nifty50 was trading at 11,539.75, down 49.35 points or 0.43 per cent.

Asian shares also started the week in the red, faltering for the eighth straight day while the dollar climbed as US President Donald Trump raised the stakes in the heated trade dispute with China.

In the commodities market, oil prices rose as US's drilling for new production stalled and as the market eyed tighter conditions once Washington's sanctions against Iran's crude exports kick in from November.

Source: Agencies


risingbd/Sept 10, 2018/Mukul

 

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