The embattled rupee suffered yet another blow today -- falling by 18 paise to end at a fresh 16-month low of 67.51 against the US currency on heavy dollar purchases and sustained fund outflows from equities.
The embattled rupee suffered yet another blow today — falling by 18 paise to end at a fresh 16-month low of 67.51 against the US currency on heavy dollar purchases and sustained fund outflows from equities. This is the lowest closing for the rupee since January 31, 2017, when it had ended at 67.87.
A handful of cautious bias kept forex trading mood at extreme level despite a better start. Currency traders stayed on the sidelines ahead of the critical inflation reading and the Karnataka election verdict, largely ignoring bearish dollar trend overseas.
The home currency regained some upside traction in early trade amidst ongoing bearish trend. Earlier in the day, the rupee resumed firm at 67.24 from weekend’s close of 67.33 at the Interbank Foreign Exchange (Forex) market on bouts of dollar selling by exporters and banks.
It later picked up extra pace and touched a fresh intra-day high of 67.21 before taking a quick reversal in mid afternoon deals amid lack of any strong follow-through. The local unit plummeted sharply to hit a fresh low of
67.63 towards the tail-end trade before concluding at 67.51, revealing a loss of 18 paise, or 0.27 per cent.
The RBI, meanwhile, fixed the reference rate for the dollar at 67.3153 and for the euro at 80.5091. Adding to the negative sentiments, country’s industrial output grew by 4.4 per cent in March, the slowest in five months, due to a fall in capital goods production and deceleration in mining activity.
US trade policy and geopolitical uncertainties are the major negative factors playing out. Widening nation’s current-account and fiscal deficits against the grim backdrop of surging global crude prices have mainly hit the rupee, which has turned out to be the Asia’s worst performing currency.
The Indian currency has been the worst performer this year so far, losing over 5.69 per cent value since January against the US dollar. The rupee coming under pressure signals potential troubles that await Asia’s third-largest economy, a forex dealer commented.
Oil prices steadied below 3-1/2 year highs as resistance emerged in Europe and Asia to US sanctions against major crude exporter Iran, while rising US drilling pointed to higher North American production. Brent crude, an international benchmark, was trading at USD 77.36 a barrel in early Asian trade.
In the meantime, continuing downward trend, country’s foreign exchange reserves fell by USD 1.426 billion to USD
418.940 billion in the week to May 4, due to decrease in foreign currency assets, RBI data showed.