Rupee ends at lowest in over six months at 71.76 vs USD; here are the key reasons

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Published: August 20, 2019 5:54:15 PM

The Indian currency Rupee ended at its lowest level on Tuesday at 71.76 per dollar against the previous close of 71.49 amid rising crude oil prices. This is the second consecutive day when Rupee ended lower.

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The Indian currency Rupee ended at its lowest level on Tuesday at 71.76 per dollar against the previous close of 71.49 amid rising crude oil prices. This is the second consecutive day when Rupee ended lower. The rising crude oil prices along with strong dollar overseas are the main reasons for a lower rupee. Sell-off in the equity markets also added pressure to the currency, according to analysts. The rupee settled at its lowest level of 71.43 in more than six months on Monday. 

“Overall, there is uncertainty across sectors. The outlook is lacklustre in the auto sector. The weak quarterly numbers along with the lower GDP numbers are adversely impacting the Indian currency. There is selling pressure in equity markets amid ongoing tensions between China and the US. The ongoing trade tensions between India and Pakistan also don’t augur well for the Indian currency going forward and may bring the currency down,” Ajay Kedia, Director, Kedia Commodity told Financial Express Online. 

The Indian rupee may touch a level of 72.50 per dollar in the next 15-20 days, according to Kedia. He said that the strong dollar index is also weighing on the Indian currency and other Asian currencies are also under pressure. The foreign institutional investors have been withdrawing from India after the government announced additional surcharge on super-rich with an annual income of Rs 2 crore or more. According to NSDL data, in August so far, the FPIs have withdrawn Rs 5,098 crores due to increase in tax on super-rich which also applies to those registered as FPIs in India. The markets are expecting some stimulus from the government but till now they have not yet received any relief from the government. 

Today, the Indian headline indices – Sensex and Nifty ended lower at 37,328, down 74.48 from the last close, while the Nifty also closed lower at a level of 11,017, down 36.90 points from the last close. Both the indices had opened marginally higher today. 

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