Rupee falls beyond 70.50 a dollar: 5 things to know
The rupee weakened past the 70.50-a-dollar mark today amid rising oil prices.
The rupee fell beyond 70.50 a dollar amid rising prices. The rupee settled at 70.51 a dollar, down 5 paise from Monday’s close. On Monday, the rupee had closed at 70.46 against the US dollar, dropping by 88 paise, its biggest single-day loss in more than three months. Weak domestic equity markets also weighed on the rupee. Market benchmark indices Sensex and Nifty today broke their six-session rising streak as cautious investors weighed a host of factors like depreciating rupee, rising crude prices and weak global cues. The dollar weakened against its major peers today after the US-China trade truce calmed global markets.
USD Vs INR today: 5 Things to Know
1) Oil prices continued to rise today after surging 4% on Monday. The US-China trade truce and expectations of supply cuts at this week’s key OPEC meeting have lifted global oil prices after they fell lost 30% in two months. Brent crude futures today gained 1.1% to $62.35 a barrel. Higher oil prices puts pressure on India’s current account and fiscal deficit and thus the rupee.
2) Commenting on the recent weakness in the rupee, Rushabh Maru of Anand Rathi said: “The rupee has declined on account of sharp rebound in the crude oil prices in the international market. Further India’s GDP and fiscal deficit data disappointed the market. Hence the rupee is under pressure.” India’s economic growth slowed to a lower-than-expected 7.1% in the September quarter.
3) Higher crude prices are likely to widen India’s current account deficit to 3% of GDP in the July-September quarter of the current fiscal, from 2.4% in the preceding quarter, rating agency ICRA said. The current account deficit to widen sharply to $19-21 billion or 3% of GDP in Q2 (July-September) FY2019, from the modest $7 billion in Q2 FY2018, led by higher crude oil prices and gold imports, the credit rating agency said in a statement.
4) Despite its recent weakness, the rupee is sharply higher from its October lows of 74.48 a dollar, helped by a moderation in oil prices. On Friday, the rupee had closed at a four-month high of 69.58 against the US dollar.
5) The rupee is likely to remain in the range of 70.25-70.65 against the US dollar in the near term, said forex advisory firm IFA Global. Forex traders will be closely watching the outcome of RBI and OPEC policy meet due later this week. The RBI is likely to keep interest rate unchanged in the policy meeting. But its guidance will be important, say analysts.
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