Rupee Plunges To All-Time Closing Low Against Dollar: 10 Things To Know
Rupee gave up early gains against the US dollar to close at an all-time closing low of 70.16 on Monday. During Monday's session, the rupee had gained as much as 21 paise against the greenback to hit an intraday high of 69.65, but failed to sustain those advances. The rupee had last registered an all-time closing low less than two weeks ago. Weakness in the rupee came amid strengthening in the dollar, after Federal Reserve Chairman Jerome Powell reiterated the US central bank's intention to raise interest rates further, albeit at a gradual rate.
Here are 10 things to know about the rupee:
1. The rupee started Monday's session on a higher note at 69.75 traded in the range of 69.65-70.20 against the greenback before settling at 70.16 for the day. That marked the lowest closing of the rupee since August 16, when it had settled at a record 70.15 against the American currency.
2. The dollar index, which tracks the greenback against six major currencies, rose 0.1 per cent.
3. Mr Powell's remarks on Friday did not change market expectations for further monetary tightening despite opposition from US President Donald Trump.
4. However, the market interpreted Mr Powell's speech as dovish after he said a gradual approach to raising rates remained appropriate to protect the US economy, keep job growth strong and inflation under control.
5. Dollar demand due to a fall in crude oil prices also pressurised the rupee, say analysts. Crude oil prices, however, reversed early losses to climb to near $76 a barrel as a committee monitoring a deal on oil output curbs between OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC producers saw production rising while a US-China trade dispute capped gains.
6. Losses for the rupee came despite a sharp surge fresh all-time highs in domestic equity markets. BSE benchmark index Sensex soared 442 points to settle at 38,694 and the NSE Nifty ended 134 points higher at 11,691. Both benchmarks indices logged their biggest single-day gains in nearly five months.
7. Foreign investors and funds pumped in a little over Rs 6,700 crore into the capital markets so far this month.
8. The rupee has been hit by a range of factors surging global crude prices and lukewarm export growth. Trade protectionism measures taken by the US government has also contributed to excess volatility in the forex market. The rupee is down more than 9 per cent so far this year, which makes it the worst performing currency in Asia.
9. The rupee has been depreciating steadily for the past few months largely reflecting investors' concerns about the country's widening trade and current account deficits. The current account deficit hit a 62-month high of $18 billion in July.
10. The country's foreign exchange reserves fell by $33.2 million to $400.847 billion in the week to August 17, mainly due to fall in foreign currency assets, according to Reserve Bank of India data.
(With agency inputs)
