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Rupee Falls To All-Time Closing Low Of 74.39 Against Dollar: 10 Points

The rupee declined to register a new life-time low of 74.27 against the greenback during the session, but recovered some of those losses.

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The rupee had on Monday closed below the 74 mark against the US dollar for the first time

The rupee shed 33 paise to close at a life-time low of 74.39 against the dollar on Tuesday. A surge in crude oil prices and strength in the dollar overseas pulled the rupee lower amid weakness in emerging market currencies, say analysts. The rupee had started the session on a stronger note, and hit an intraday high of 73.88 against the greenback in the morning session. However, it gave up those gains in the second half of the day. The rupee closed lower against the dollar for the sixth session in a row.
Here are five things to know:
  1. Investors remained concerned over sustained foreign capital outflows and the rise in crude oil price to above the $84 a barrel mark, not far from a four-year high of $86.74 registered last week.
  2. Sentiment in the forex market has been weaker after the Reserve Bank of India's surprise move on Friday to keep key interest rates on hold, against expectation of a 25-basis point hike by analysts. The central bank kept the repo rate - the rate at which it lends short-term funds to commercial banks - unchanged at 6.5 per cent.
  3. The International Monetary Fund downgraded its global growth forecast for the first time since 2016. The IMF cut its growth projection for India by 0.1 per cent to 7.4 per cent for next year citing external factors citing external factors.
  4. Analysts expect high crude oil prices to continue to put pressure on the rupee going forward.
  5. "With the November deadline on sanction on oil exports from Iran looming large and now China also intervening by stepping in to increase the liquidity, we expect this to put further pressure on other Emerging market currencies including the rupee," said Salil Datar, executive director and CEO, Essel Finance VKC Forex.
  6. The US has imposed sanctions on Iranian crude exports which will come into effect on November 4.
  7. Chinese central bank intervention to infuse liquidity into the country's system is impacting emerging market currencies including the rupee, said Mr Datar. "We expect the rupee to continue to be weak and can see 74.50-74.75 levels unless there is some serious intervention from the Centre."
  8. Beijing moved over the weekend to spur more lending. Spot yuan slid to its lowest official close against the dollar in seven weeks on expectations of more easing by China.
  9. Meanwhile, domestic equity markets fell amid heavy selling in auto, consumer durables and FMCG sectors. The Sensex shed 174 points to close at 34,299 while the Nifty dropped 47 points to settle at 10,301.
  10. Foreign institutional investors (FIIs) sold shares net worth a net of Rs.1,805 crore on Monday, provisional data showed.

(With agency inputs)



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