How rupee looses steam to hit 7-mth low
The Indian rupee hit its lowest level against the dollar in about seven months Tuesday amid a worsening trade scenario and a steep increase in global oil prices. With the technical level above Rs. 65.50 breached for a sustained period, the local unit is Asia's worst performing currency this year after the Philippines peso.
“A combination of global and domestic factors is triggering the rupees loss,” said Ashish Vaidya, head of trading at DBS Bank India. “Growing trade protectionism and slippery oil prices could put pressure on the countrys current account deficit and fiscal conditions. Upcoming elections raise the risk of uncertainty, which will make international investors more cautious.”
The rupee lost about 1% in the past three trading sessions to close at 65.65 a dollar Tuesday, a level not seen since September 27 last year.
During the day, it dipped to 65.69 after which the Reserve Bank of India (RBI) is said to have intervened to check further sharp fall, dealers said. Some state-owned banks were seen buying dollars.
The ongoing trade war between US and China may impact the Chinese currency, with a ripple impact on other emerging markets including India.
Moreover, rising geopolitical tensions after the missile attacks in Syria continue to threaten global stability.
Crude oil prices remained elevated above $70 per barrel, increasing Indias import bill as the country is one of the largest oil consumers in the world. Global crude oil prices rose to $72 a barrel, adding about $5/barrel in a week amid growing geopolitical concerns.
Indias merchandise trade deficit, or imports over exports, was at $157 billion in 2017-18, the steepest in the past five financial years.
“The latest fall of the rupee could be attributed to both fundament and technical factors,” said Bhaskar Panda, senior VP, treasury, HDFC Bank. “On the fundamental side, it shows higher import bill due to rising oil prices. The rupee is likely to trade in a wide range with a downward bias.”
The rupee may continue to lose value amid a raft of global and domestic uncertainties. An ET poll conducted among 21 market participants showed that the local unit could fall up to 3% in the first half of this financial year.
|Offshore Chinese Renminbi||CNH||3.750099614|
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