BackRupee closes down 1.23% against dollar
So far in August, the rupee has fallen over 3.8%, the worse month for the currency in at least two years
Premium
Mumbai: The rupee on Monday weakened 1.23% against the US dollar—the steepest fall since 6 September 2013, following a global sell-off across risk assets, including the domestic equity markets.
The currency closed at 66.65, down 1.23% from its previous close of 65.83. The local unit opened at 66.39 per dollar and touched a low of 66.73—a level last seen on 4 September, 2013.
“The rupee has weakened because of a fresh bout of sell-off in the Chinese equity market which has also impacted local markets here. State-owned banks have been trying to support the rupee today but I expect the currency to remain weak at least for the rest of the week. We are now headed towards 67 per dollar," said Ashish Vaidya, executive director and head fixed income trading at DBS Bank Ltd.
The 30-share Sensex closed down 1624.51 points, or 5.94%, at 25741.56 points, the lowest since 11 August 2014. In percentage terms, it was the biggest fall for Sensex since 7 Jan 2009, while in absolute terms, it was the biggest decline since Jan 2008.
The National Stock Exchange’s (NSE) 50-share Nifty closed down 490.95 points, or 5.92%, at 7809, its lowest close since 17 October 2014.
Earlier in the day, the 30-share Sensex had fallen as much as 1741.35 points, or 6.36%, to 25,624.72, while Nifty had tumbled 530.55 points, or 6.39%, to 7,769.40.
Most of the Asian currencies closed lower. The Malaysian ringgit was down 1.8%, Indonesian rupiah 0.8%, China offshore 0.71%, Taiwan dollar 0.51%, Singapore dollar 0.38%, South Korean won 0.34%, Philippines peso 0.3%, China Renminbi 0.24% and Thai Baht 0.17%. However, Japanese yen was up 1.6%.
The yield on India’s 10-year benchmark bond closed at 7.891%—a level last seen on 29 June—compared with its Friday’s close of 7.787%. Bond yields and prices move in opposite directions. It touched a high of 7.894%—a level last seen on 14 July.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.152, down 0.9% from its previous close of 95.01.
“Our assessment of the current move is that it is a profit-booking, stop-loss move which will continue for a while. The rupee will not be beaten as much as its peers and will also be the one to bounce swiftly once markets calm down," said Samir Lodha, managing director at QuantArt Market Solutions.
So far in August, the rupee has fallen over 3.8%—the worse month for the currency in at least two years. Since the beginning of this year, the rupee has lost 5.4%. On a net basis, foreign institutional investors have bought $6.81 billion in the local equity and $6.37 billion in the bond markets so far this year.
Speaking at a conference in Mumbai on Monday, Reserve Bank of India governor Raghuram Rajan said that India has adequate reserves to prevent undue volatility.
“India has $355 billion of reserves and another $25 billion because our forward dollar sales are not due for the next one year; so, we have $380 billion to play with if needed," said Rajan.
“We try to prevent undue volatility. If we see undue volatility, we have the resources to deal with it," he said.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
