Rupee tumbles 60 paise to 72 against US dollar in early trade

The rupee tumbled 60 paise to 72.03 against the US dollar in the early morning trade on Tuesday amid mixed oil prices and subdued Asian equities. 

The domestic unit on Friday appreciated by 38 paise to close at a two-week high of 71.42 on Friday led by a rally in domestic equities and renewed hopes of the US-China trade talks. 

Data shows foreign investors pulled out a net amount of Rs 5,920 crore from the Indian capital markets in August, even as the government rolled back enhanced surcharge on FPIs last week. In July, overseas investors had pulled out a net amount of Rs 2,985.88 crore from the capital markets. Prior to the announcement of enhanced super-rich tax in the Union Budget for 2019-20 in July, FPIs were net buyers for five consecutive months.

On the macro front, India's GDP in Q1 grew at 5 per cent compared to expectation of 5.7 per cent, thereby raising chances of further rate cut by the RBI. The Indian economy grew at a slowest pace in six years following weak investment growth and sluggish demand. Last week, the Finance Minister Nirmala Sitharaman announced a number of steps to revive economic growth and shore up market confidence, including rolling back recent tax hikes on foreign and domestic equity investors and several measures for industries. 

"Today, USD/INR pair is expected to quote in the range of 71.60 and 72.30," said Gaurang Somaiya, Research Analyst (Currency) at Motilal Oswal Financial Services (MOFSL).

On the global front, stocks faced headwinds on Tuesday, stymied by US-China trade frictions while the British pound flirted with 2 1/2-year lows as Prime Minister Boris Johnson indicated he could call an election to block lawmakers’ efforts to avert a no-deal Brexit. MSCI’s broadest index of Asia-Pacific shares outside Japan shed 0.3 per cent while Japan’s Nikkei rose by 0.1 per cent, said a Reuters report. 

In commodities, US crude was down 21 cents, or 0.4 per cent, at $54.89 a barrel by 08:14 am, while Brent was 5 cents higher at $58.71 a barrel. In the currency market, sterling dipped 0.25 per cent to $1.2030 , after having dropped 0.85 per cent on Monday. The currency stood just above its 2.5 year-low of $1.2015 hit on August 12, the Reuters report said.