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Rupee pares gains, slips back to 74 levels

The domestic unit on Monday slumped 30 paise to finish at a fresh lifetime low of 74.06 amid strengthening of the greenback and steady capital outflows.

SI Reporter  |  New Delhi 

Rupee
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The rupee on Tuesday slipped back to 74 levels after opening 18 paise higher at 73.88 against the US dollar.

The domestic unit fell up to 74.02 in the early trade. At 09:44 am, the currency was trading at 73.98 against the greenback.


Earlier, after crashing to a fresh record low of 74.06 on Monday, the rupee recovered a bit and opened 18 paise up at 73.88 against the US dollar on Tuesday.

The domestic unit on Monday slumped 30 paise to finish at a fresh lifetime low of 74.06 amid strengthening of the greenback and steady capital outflows. It was the 6th straight session of rupee depreciating against the dollar.

Foreign institutional investors (FII) were net sellers to the tune of Rs 4,419 crore on October 5, 2018. FIIs have been net sellers to the more than Rs 11,405 crore in October 2018, according to a note by ICICI Securities.

"Indian Rupee is expected to trade with a negative bias amid a strong dollar and rising crude oil prices. Demand for the dollar is going up on solid economic data from the US and, as US Federal Reserve raised interest rates by 25 bps and signalled further monetary tightening," said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.

Mukadam further said that traders will remain cautious ahead of the macroeconomic data, US Treasury currency report and IMF meeting.

The domestic unit crashed below the 74-mark for the first time ever in intra-day trade on October 5 after the RBI unexpectedly kept the policy rate unchanged.

Markets were caught off guard as the Reserve Bank maintained the status quo on the benchmark interest rate. However, the central bank warned that rising oil prices and the tightening of global financial conditions pose substantial risks to growth and inflation.

On the global front, Asian shares hit 17-month lows on Tuesday as China allowed its currency to slip past a psychological bulwark amid sharp losses in domestic share markets, a shift that pressured other emerging currencies to depreciate to stay competitive. MSCI’s broadest index of Asia-Pacific shares outside Japan eased another 0.2 per cent after ending Monday at its lowest point since May last year. Japan’s Nikkei fell 1.2 per cent, hurt in part by a rise in the safe-harbour yen, said a Reuters report.

Oil prices rose as more evidence emerged that crude exports from Iran, OPEC’s third-largest producer, are declining in the run-up to the re-imposition of US sanctions and as a hurricane moved across the Gulf of Mexico.

First Published: Tue, October 09 2018. 09:15 IST
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