The rupee today recovered some bit of ground against the US dollar after falling to year's lowest on Tuesday. Opening at 72.20, the rupee moved in the range of 71.96-72.29 against the US dollar, before settling at 72.12. The rupee had settled at 72.39 against the US dollar on Tuesday - its lowest close this year. Some recovery in domestic equity markets and a broad slide in the US dollar against other currencies helped the rupee pull back after yesterday's sharp fall.
Here are 5 things to know about rupee vs US dollar trade today:
1) The dollar index, which measures the value of the US dollar against six other currencies, was down 0.35% at 98.65. This follows manufacturing activity in US contracting for the first time in three years last month, data from the Institute for Supply Management (ISM) published on Tuesday showed. This spurred a further bond rally as investors increased bets on deeper interest rate cuts from the Federal Reserve.
2) The rupee could trade in the range of 71.95-72.40 in the near term, says forex advisory agency IFA Global. The US dollar has weakened across the board post ISM manufacturing data which came in at the lowest in 3 years.
3) Indian stock markets also recovered some ground after Tuesday's selloff. The Sensex ended 161 points higher. Investors remain cautious. "As far as the domestic economy is concerned, the news flow is all negative, with growth concerns worsened by weak auto sales," said Neeraj Dewan, director of Quantum Securities.
4) The rupee is down about 3.5% so far this year, spooked by outflows from Indian capital markets in recent months. Foreign investors sold equities worth ₹17,592 crore (net) from Indian equity market in August.
5) Many analysts expect the rupee to weaken further amid global trade war jitters, domestic slowdown concerns and weak earnings. "Rupee is likely to depreciate towards 73.5 by the end of September 2019 if the trade war escalates further between US and China and outflows from Indian equity market continues," said Vaqarjaved Khan, research analyst at Angel Broking. (With Reuters Inputs)