Rupee Moves Lower To Close At 73.68 Against Dollar: 10 Things To Know

A rise in the dollar overseas and weakness in domestic equity markets also impacted the currency, say analysts.

Rupee Moves Lower To Close At 73.68 Against Dollar: 10 Things To Know

The rupee is set to finish the month with a loss of more than 1.5% against the dollar

The rupee declined by 23 paise against the dollar to close at 73.68 on Tuesday. Demand for the greenback from importers amid softening crude oil prices dragged the rupee lower. A rise in the dollar overseas and weakness in domestic equity markets also impacted the currency, analysts said. The rupee is set to finish the month with a decline of more than 1.5 per cent against the American currency. It has depreciated more than 15 per cent so far this year.

Here are 10 things to know:

  1. The rupee opened lower at 73.58 against the dollar, and declined as much as 25 paise during the session - to hit an intraday low of 73.70 - before settling at 73.68 for the day.

  2. Crude oil prices fell on Tuesday, depressed by concerns that the US-China trade dispute will dent economic growth and by signs of rising global supply despite upcoming sanctions against Iran. Brent crude - the global benchmark - traded below $77 a barrel. Crude oil has recovered ground over the last week but is around $10 a barrel below four-year highs reached in the first week of October.

  3. The dollar index - which measures the American currency against a group of six major peers - inched higher and was just below its 10-week high it hit on Friday.

  4. Analysts say pressure in the rupee is expected to continue for some more time.

  5. "Besides the volatility management through active intervention by the RBI, the current levels of 73.40-50 per dollar are reflective of multiple factors such as the pullback in Brent oil...government indicating readiness to issue NRI bonds," said Salil Datar, CEO and executive director, Essel Finance VKC Forex.

  6. Investors turned cautious in the domestic equity markets a day after key indices rose around 2 per cent each. The Sensex and Nifty declined 0.5 per cent on Tuesday, as losses in energy and metal stocks offset strength in IT shares.

  7. "Barring any unforeseen economic or political event, in the immediate terms, we envisage rupee/dollar to be at 73.30-73.75 levels," Mr Datar added.

  8. Japan and India signed a $75-billion bilateral currency swap agreement on Monday. The Indian government said the currency swap agreement should aid in bringing greater stability to foreign exchange and capital markets in the country. "This facility will enable the agreed amount of foreign capital being available to India for use as and when need arises," the finance ministry noted.

  9. Capital outflows by foreign funds dampened the sentiment. Net sale of equities by foreign portfolio investors (FPIs) stood at Rs.2,230.79 crore on Monday, while domestic institutional investors (DIIs) were net buyers of stocks worth Rs. 2,526.90 crore, according to provisional data available with stock exchanges.

  10. The rupee had ended almost unchanged at 73.45 against the dollar on Monday. It had depreciated 2.1 per cent last month.

(With agency inputs)



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