Rupee closes at three-week low of Rs71.34 vs dollar

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Published: December 11, 2018 2:08:23 AM

The currency fell as much as 53 paise in intraday trade on Monday on deepening concerns over the political uncertainty in the wake of the results to key state elections.

Portfolio investments saw net inflows this month amounting to .17 billion in equity and debt as of December 10.

The rupee on Monday slipped to 71.34 against the dollar, a three-week low, against the previous close of 70.80 on Friday. Post the resignation of Reserve Bank of India (RBI) governor Urjit Patel later in the evening, the non-deliverable forwards (NDF) market indicated a weakening in the currency to levels of 72 to the greenback.

Currency market participants said the possibility of crude oil prices rising further following OPEC’s decision to cut production by $1.2 million barrels a day was one reason for the weakness in the currency. Moreover, the weak current account deficit (CAD) for Q2FY19, at $19.1 billion or 2.9% of the GDP, fuelled by a huge merchandise deficit of $50 billion, also hurt the sentiment.

The currency fell as much as 53 paise in intraday trade on Monday on deepening concerns over the political uncertainty in the wake of the results to key state elections.

Portfolio investments saw net inflows this month amounting to $1.17 billion in equity and debt as of December 10. November had witnessed a seven-month high portfolio investments amounting to $1.8 billion (FPI investments) in equity and debt. The record inflows were preceded by outflows amounting to $7.9 billion together in September and October, with the highest sell-offs in the automobile and mining sectors, according to a report by Kotak Institutional Equities.

On Friday, the rupee had staged a mild recovery to close with a gain of 0.14% against the dollar in line with a rally in domestic stocks and positive global cues. The dollex had risen to 96.57 levels in Monday’s trading session before softening/tightening somewhat. The dollex has been falling for the past three trading sessions amid escalating tensions over the US-China trade war and rising crude prices.

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