Rupee Moves Lower To 71.34 Against Dollar: 5 Things To Know

Edited by Anshul (with inputs from PTI)

19 Sep 2019, 06:49 PM IST

On Wednesday, the domestic unit had closed at 71.24.

"Since the morning, rupee has been tracking the move in crude. Overnight drop in oil led rupee to appreciate. However, the escalating tensions in Middle East limited the gains in rupee," said Rahul Gupta, Currency Research Head, Emkay Global Financial Services Limited. Mr Gupta added that the "market was disappointed with US Fed's mixed outlook".
The Federal Open Market Committee lowered the policy interest rate by 25 basis points to a target range of 1.75 to 2.0 per cent, but dimmed hopes for subsequent rate cuts as it took a cautious approach to further reductions in borrowing costs. Describing the US economic outlook as "favourable", Federal Reserve Chairman Jerome Powell said the rate cut was designed "to provide insurance against ongoing risks" including weak global growth and resurgent trade tensions.
Brent futures, the global oil benchmark, soared 2.14 per cent to $64.96 per barrel after Iran warned of an "all-out war" if it is targeted in the aftermath of the drone attacks on Saudi Arabia's oil infrastructure, further pushing up tensions across the Persian Gulf.
Heavy selling in domestic stock markets and sustained foreign fund outflows also weighed on the domestic currency, analysts said.
The Sensex dropped 470 points or 1.3 per cent to close at 36,093. its lowest level since March 1 and the Nifty 50 index slumped 136 points or 1.25 per cent to close at 10,705, its lowest level since February 19. Foreign institutional investors (FIIs) offloaded shares worth a net Rs 892.52 crore on Thursday, according to provisional exchange data.