The Indian rupee (INR) today fell sharply against the US dollar (USD) after Moody’s Investors Services lowered the nation’s rating outlook to negative citing growth concerns. The rupee fell to 71.30 at day's low against the US dollar, before recovering slightly to 71.26 in latest trade. In comparison, the rupee had settled at 70.96 on Thursday. Rupee is down about 2% against the US dollar so far during the year.
Here are 5 things to know about rupee dollar trade today:
1) The overall global sentiment is positive and this may cap losses in the rupee, says IFA Global. "We may also see the RBI intervene to calm nerves and stem the outflow especially from the bond market. The central bank off late has been on a buying spree in spot but it would not want the rupee to move out of whack such that the volatility leads to concerns over capital inflows," forex advisory firm IFA Global said in a note.
2) The rupee may trade in the range of 71.10-71.50 against the US dollar in the near term, IFA Global added.
3) The yield on the 10-year Indian government bond was at 6.53% as compared with its previous close of 6.50%. Bond yield and prices moves in opposite directions.
4) A recovery in Indian stock markets also helped cap the decline in the rupee. Benchmark index Sensex turned flat in noon trade after falling as much as 200 points in early trade.
5) Indian assets have benefited in recent weeks from strong overseas inflows. Easy global liquidity conditions combined with better-than-expected Q2 earnings, a series of government stimulus measures and five back-to-back rate cuts so far this year have spurred foreigners to buy Indian worth $501 million in November, after pumping in more than $2 billion in October. (With Bloomberg Inputs)