Rupee gains 10 paise in early trade

Lloyd Doyle
Мая 17, 2018

Mumbai: The embattled rupee suffered yet another blow on Monday - falling by 18 paise to end at a fresh 16-month low of 67.51 against the USA currency on heavy dollar purchases and sustained fund outflows from equities.

The Indian currency gained some momentum on Wednesday as it recovered from a 16-month low to trade below the psychological 68-mark against the United States dollar.

"Anand James, Chief Market Strategist at Geojit Financial Services said, "Even as political uncertainty continued to roil equity markets, rupee resisted weakness on the expectations of dollar selling by RBI, having tested 68".

The domestic unit opened strong by 10 paise at 67.70 at the interbank forex market today. The Brent crude futures and U.S. crude futures (financial oil benchmarks) remained close to their November 2014 highs of $79.47 and $71.92 a barrel respectively.

On Tuesday, the rupee had plunged to a 16-month low of 68.07 because of various factors that included the polls in Karnataka where the BJP failed to secure a majority.

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Rising global crude oil prices played a vital role in the weakening of the rupee.

Experts caution the domestic currency could continue to be under pressure. India is vulnerable to rising crude prices.

"At this rate, the current account deficit (CAD) for 2018-19 is likely to be around $80-90 billion". Goenka expects the rupee to touch the 70-mark against the greenback in early 2019.

The local currency, which is the worst performing Asian emerging market currency, bounced back from its low as some local state-run banks sold U.S. dollars on behalf of the central bank, said dealers. As per the RBI data, the country's forex reserves fell by $1.426 billion to $418.940 billion in the week to May 4.

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