The rupee weakened by 38 paise to end at 68.42 against the US dollar today. That marked the lowest closing level against the greenback since November 2016. Dollar strengthened against a basket of currencies on uncertainty over the outcome of US-China trade talks. US President Donald Trump said he was not pleased with recent trade talks between the United States and China, tempering optimism over progress made so far in trade talks between the world's two largest economies. In late morning deals, the rupee was trading at 68.19 against the US currency. The rupee had closed at 68.04 against the American currency the previous day.
- Rupee weakened by 38 paise against US dollar on Wednesday
- It settled at 68.42, lowest closing against dollar since November 2016
- Uncertainty over outcome of US-China trade talks strengthened dollar
Here are five things to know about the rupee's movement against the US dollar today (INR vs USD):
1. The rupee is down more than 6 per cent so far this year amid concerns over current account deficit after global crude oil prices surged to multi-year highs.
2. The rupee could weaken further to 70 against the US dollar, say experts. "Macros are stacked against the rupee...and the possibility of rupee hitting 70 soon is increasing," according to forex advisory firm IFA Global.
3. "The risk sentiment seems to have dampened post Trump denying his administration's claim that a framework on trade was being worked out with China that would ease the current trade tensions," said IFA Global, a forex advisory firm. Mr Trump's remarks followed Beijing's announcement that it would cut import tariffs for automobiles and car parts. Investors also awaited minutes of the Federal Reserve's last policy meeting due later in the day for hints on the pace of further US monetary tightening.
4. Forex traders will also watch FOMC (Federal Open Market Committee) minutes for any signs of hawkishness and perceptible changes in views of US central bank members on expected economic conditions.
5. Weakness in the stock markets also impacted the rupee. A selloff in metal and energy stocks dragged the BSE Sensex and NSE Nifty lower. However, a surge in heavyweight SBI shares limited the downside. Foreign portfolio investors (FPIs) sold shares worth a net Rs 1,651.63 crore while domestic institutional investors (DIIs) bought shares worth Rs 1,496.83 crore on Tuesday, provisional data shows.
(With agency inputs)