Rupee ends at record low of 74.39 a dollar

The rupee ended at 74.39 a dollar, down 0.43% from Monday's close of 74.07. The currency opened at 73.85 against the dollar and touched an all-time low of 74.39

Ravindra Sonavane
Updated9 Oct 2018, 05:39 PM IST
Photo: Bloomberg
Photo: Bloomberg

Mumbai: The rupee closed at a record low against the US dollar on Tuesday tracking losses in global currencies, due to deepening trade tensions between the US and China.

The home currency ended at 74.39 a dollar, down 0.43% from Monday’s close of 74.07. The currency opened at 73.85 against the dollar and touched an all-time low of 74.39.

It has fallen 14% so far this year.

Domestically, continued selling by foreign investors on the fears of fiscal slippage affected sentiment. So far this year, FIIs sold a combined of $11 billion in the equity and debt market.

“We expect INR weakness to persist, heading towards 75+ levels against the dollar, amid difficult global and domestic environment, unless some additional assertive policy steps come through. Even as we see a less probability of any unconventional policy measures amid comfortable foreign exchange warchest, we do not fully rule it out if INR remains volatile and an emerging market outlier in fragile foreign exchange space,” according to Madhavi Arora, economist, foreign exchange and rates, Edelweiss Securities Ltd.

The recent RBI policy, which left key rates unchanged, failed to provide concrete solutions to stop the depreciation of the currency.

“The RBI subtly suggested that foreign exchange markets were fluid and should let the rupee find its fair equilibrium. However, any imported inflation pressures arising out of currency depreciation would impact RBI’s reaction function, ” Arora added.

Globally, the US was concerned about the yuan’s depreciation as the Treasury Department weighed whether to name China a currency manipulator in its semi-annual report due next week, Bloomberg reported.

Also, the International Monetary Fund lowered its world growth forecast to 3.7% for this year from 3.9% projected three months ago. The IMF cited escalating trade tension and stress in emerging markets as key reasons.

The 10-year g-sec stood at 8.076%, from its previous close of 7.975%. Bond yields and prices move in opposite directions.

The Sensex fell 0.51% to 34,299.47. Year to date, it has gained 1.2%.

Asian currencies were trading lower. The South Korean won was down 0.23%, Thai Baht 0.16%, Indonesian rupiah 0.13%, Singapore dollar 0.13%, Hong Kong dollar 0.06% and Taiwan dollar 0.06%.

The dollar index, which measured the US currency’s strength against major currencies, was trading at 95.758, down 0.01% from its previous close of 95.761.

(Bloomberg contributed to this story)

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First Published:9 Oct 2018, 05:39 PM IST
HomeMarketStock-market-newsRupee ends at record low of 74.39 a dollar

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