You are here: Home » Markets » News
Business Standard

Rupee falls 55 paise to 64.04 a dollar amid deficit, oil price concerns

Overall forex sentiment turned into dismay after the country's trade deficit widened to a three-year high

Press Trust of India  |  Mumbai 

rupee

Hit by a double whammy of rising global crude prices and worsening trade deficit, the currency market today witnessed a with the plummeting to end at a fresh two-week low of 64.04 against the US dollar.

Recording its biggest single-day crash in eight months, the Indian currency today lost a whopping 55 paise, or 0.87 per cent, in highly volatile trade.

Overall forex sentiment turned into dismay after the country's trade deficit widened to a three-year high on and gold imports.

India's exports rose at a healthy pace in December by 12.36 per cent to USD 27.03 billion, but imports surged significantly to USD 41.91 billion, up 21.12 per cent, widening trade deficit to USD 14.88 billion, up about 41 per cent year-on-year.

The started on a negative note today.

The intense pushed the to hit a fresh low of 64.15 in intra-day levels during mid-afternoon after a sense of panic rippled through currency trading floors.

After a breath-taking rally since November last year, the once again turned shaky and bore the wrinkled brunt of immense selling on near-term concern over risk of fiscal slippage due to a sudden spike in global crude prices.

The rising inflation and some speculation that the government may miss its deficit target after international hit USD 70 a barrel will give less space to the RBI to cut rates in the near term, adding to worries.

The accelerated to 5.2 per cent in December last year, though wholesale prices eased to 3.58 per cent in December 2017.

On the international commodity front, global crude prices consolidated recent gains at around USD 70 a barrel on Tuesday, a level not seen since 2014.

Brent crude futures were trading weak at USD 69.51 a barrel in early Asian trading.

In early trade, the opened with a sharp gap-down at 63.60 against Monday's close of 63.49 at the Foreign Exchange (forex) market and remained under immense pressure throughout the session, despite weak dollar overseas.

It finally settled down at 64.04 after briefly hitting a low of 64.15, revealing a steep loss of 55 paise, or 0.87 per cent.

It's hard to justify the intensity of the big fall in a single day despite broader weakness in the greenback against other currencies.

The rapid surge in global crude prices is a big reason the has take a beating and the trade deficit has swollen. It is likely to have a huge disruptive force and a continued source of for in 2018, a commented.

In the meantime, domestic bourses succumbed to modest profit-taking after their three-day record winning run amid concerns over rising crude as well as weak macroeconomic data.

The benchmark BSE-sensex dropped 72 points to end at 34,771.05, while over 41 points to 10,700.45.

In cross-currency trades, the took a further knock against the pound sterling and finished at 88.11 per pound from 87.46 and dropped sharply against the Japanese yen to close at 57.86 per 100 yens from 57.41 yesterday.

The home unit also drifted against the euro to end at 78.22 compared to 77.87.

On the global front, the dollar staged mild recovery from sharp losses posted against other major currencies, but gains were expected to remain limited and the greenback was still trading within close distance of a three-year trough.

The dollar index, which measures the greenback's value against a basket of six major currencies, was down at 90.41 in early trade.

Elsewhere, the common currency euro took a breather after a spectacular four-day rally against the US dollar supported by both German politics and ECB's resistance to intervene.

The British pound is trading marginally weak against the American unit after the UK consumer inflation, as measured by headline CPI matched consensus estimates and eased to 3.0 per cent during December.

In forward market today, premium for dollar moved up owing to mild paying pressure from corporates.

The benchmark six-month premium payable in June gained to 128-130 paise from 127-129 paise and the December 2018 contract also edged up to 266-268 paise from 264-266 paise previously.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Tue, January 16 2018. 20:17 IST
RECOMMENDED FOR YOU