Indian rupee today weakened past 71 levels against the US dollar, falling to 6-month lows against the greenback. So far during the day, the rupee traded in the range of 71.02 to 71.40 against the US dollar, before settling at 71.39 as compared to previous close of 70.79. Reflecting global risk-off sentiment, stock markets across the globe slumped today as fears about a drawn out China-US trade war, protests in Hong Kong and a crash in Argentina's peso currency drove investors to safe harbours like bonds, gold, and the yen.
5 things to know about INR (rupee)-USD (US dollar) trade today:
1) Forex advisory firm IFA Global in a note said that rupee may remain weak in the near term due to broad risk-off sentiment in global markets. "Likely range 71.05-71.50 with up side bias," IFA Global said. Risk-off gauges are turning for the worse, IFA Global added, referring to the drop in bond yields in major markets. "Commodity currencies are weak. Gold continues to rally," IFA Global said. Gold prices in India rose to new highs today, supported by a slide in rupee's value against the US dollar.
2) Hong Kong's airport, the world's busiest cargo airport, reopened today after protesters managed to close it down the previous day. But the mood remained cautious as the increasingly violent demonstrations have plunged the Chinese-ruled territory into its most serious crisis in decades. India today issued an advisory to its citizens for travelling to Hong Kong, reported news agency ANI. There is political turmoil brewing in Italy and Argentina that is also keeping markets on the edge, IFA Global said.
3) Back in India, foreign portfolio investors continued their selling spree, pulling out a net amount of ₹9,197 crore in just seven trading sessions this month, hurting the rupee. Indian stock markets also tumbled today, with Sensex falling over 600 points.
4) Analysts say that strength of the US dollar against other overseas currencies and global risk-off sentiment kept investors edgy. The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.20% to 97.56.
5) India's rupee may recover below 70 levels against the US dollar over the coming 12 months, according to a Reuters poll which was held last week. They said that the issuance of sovereign bonds in foreign currencies may help prop it up.