Rupee Falls Sharply Against US Dollar, Heads Towards Crucial Level: 5 Points

The rupee came under pressure today, sliding close to 68 levels against the US dollar at day's low. The rupee traded in the range of 67.99 to 67.61 against the US dollar on Tuesday, before settling at 67.86 against the greenback. Renewed weakness in the rupee comes in contrast to some degree of strength shown by the Indian currency in the past few days. The rupee had ended at a fresh two-week high of 67.43 on Monday.
Here are five things to know about the rupee vs dollar (INR vs USD) trade today:

1. "Continued foreign capital outflows and month-end dollar demand weighed on rupee sentiment," news agency Press Trust of India cited a dealer as saying. Foreign portfolio investors (FPIs) had net sold shares worth Rs 795.06 crore on Monday, according to provisional data from the NSE.

2. The weakness in the rupee comes in the wake of a broad strengthening of the US dollar. The dollar has rebounded after touching two-week lows versus a basket of currencies. Today, it rose to a six-and-a-half-month high versus the euro amid the political turmoil in Italy.

3. Global crude prices remained subdued today amid prospects of major oil producing countries increasing their output. Crude futures were around the $75 mark, having fallen nearly 7 per cent since hitting a 2014 high above $80 earlier this month.

4. The fall in the global crude prices had led to some strengthening in the rupee, which had fallen to an 18-month low of 68.45 against the US dollar last week.

5. Forex experts say that apart from the broad movement in dollar, the crude price also needs to be monitored closely. A decline in crude oil prices will support the Indian currency from falling sharply, says forex advisory firm IFA Global. The sentiment in the rupee was also hurt by weakness in the domestic stock markets. The Sensex fell over 200 points today, snapping a 3-day winning streak.(With Agency Inputs)