Profit

Rupee Falls To Lowest In Over A Year Against US Dollar, Breaches Key Level

The rupee fell to as much as 67.18 per dollar, its lowest level since February 2017.

1KShare
EMAIL
PRINT
COMMENTS
Rupee Falls To Lowest In Over A Year Against US Dollar, Breaches Key Level

Rupee vs US dollar today: Higher crude price and broad dollar strength hurt the rupee.

The rupee (INR) fell sharply against the US dollar (USD) today to breach the 67 mark against the greenback. The rupee fell to as much as 67.18 per dollar during today's trade, its lowest level since February 2017. The rupee had closed at 66.86 per dollar on Friday. The rupee was dragged down by a broad strengthening of the US dollar and a rise in global crude prices, says forex advisory firm IFA Global. Higher domestic equity markets helped provide some support to the rupee at lower levels. The Sensex rose nearly 300 points today. The rupee ended at 67.13 per dollar, its lowest close since February 8, 2017.
Here are 5 things to know about the rupee's fall against the US dollar:
  1. "Rupee weakness is due to two factors: fundamentals driven by higher oil prices and the pressure on the balance of payments and the rising yields in the West. Both act as potential sore points for the rupee," says Madan Sabnavis, chief economist of CARE Ratings. The recent run of solid US economic in contrast with a softer turn in European data has also lifted the US dollar to its highest for the year so far against the euro. The dollar also reached its highest since December against a basket of currencies. A firming US dollar has also been negative for some commodities like gold.
  2. Global crude prices hit their highest in more than three years as global supplies remained tight and the market awaited news from Washington on possible new US sanctions against Iran. US President Donald Trump has set a May 12 deadline for Europeans to "fix" the deal with Iran over its nuclear program or he would refuse to extend US sanctions relief for the oil-producing country. Brent crude futures added 31 cents to $75.18 a barrel.
  3. The Reserve Bank of India (RBI) last week announced purchase of sovereign bonds via open market operation (OMO). The RBI said it will buy Rs 10,000 crore of government bonds on May 17. "The RBI announced an OMO purchase on Friday which is mainly intended to sterilize the rupee liquidity taken out of the system due to forex intervention. However it could lift sentiment in rates market temporarily," says forex advisory firm IFA Global.
  4. Mr Sabnavis of CARE Ratings expects the rupee to remain volatile in the near future. "While oil may settle down in a month or so, the US interest rates will continue to remain high until such time that the US Federal Reserve does something decisively. We can expect volatility until such time RBI intervenes in the market at what it thinks would be the right rate," he said.
  5. On the domestic front, the key trigger would be the Karnataka polls on Saturday, the results of which will be out on next Tuesday, it added. (With Agency Inputs)


Comments

NDTV Beeps - your daily newsletter

................................ Advertisement ................................

................................ Advertisement ................................

................................ Advertisement ................................

Top