You are here: Home » PTI Stories » National » News
Business Standard

Rupee declines by 33 paise as stimulus fails to cheer investors

Business Finance

Press Trust of India  |  Mumbai 

The rupee plummeted by 33 paise to close at 75.91 against the US dollar on Monday, tracking weak domestic equities and foreign fund outflows.

Forex traders said rising crude oil prices and concerns about the effectiveness of the fiscal stimulus package weighed on investor sentiment.

"India's rupee led losses among emerging-market currencies in Asia on disappointment over the government's stimulus announcements. Spot USDINR is expected to find resistance around 76.50 on expectation of foreign fund inflows at lower equity levels," said Devarsh Vakil, Head Advisory, HDFC securities.

Market participants also said that the extension of the nationwide lockdown could weigh on the economic outlook of the country.

The government on Sunday extended the coronavirus lockdown for two more weeks with the fourth phase providing more relaxations outside the containment zones.

Though some restrictions were eased, "but the extension could further worsen the economic outlook for the current fiscal year, which could weigh on the currency further," Reliance Securities said in a research note.

The local unit opened sharply lower at 75.85, then lost further ground to finally settle at 75.91 against the US dollar, down 33 paise over its previous close.

It had settled at 75.58 against the US dollar on Friday.

Meanwhile, BSE Sensex crashed 1,069 points or 3.44 per cent on Monday tracking massive selloffs in banking and auto stocks. The wide-based NSE Nifty dropped 313 points or 3.43 per cent.

Foreign institutional investors were net sellers in the capital market, as they sold equity shares worth Rs 2,388.04 crore on Friday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, rose 4.22 per cent to USD 33.87 per barrel.

According to Jateen Trivedi, Senior Research Analyst (Commodity & Currency) at LKP Securities, "The rupee extended weakness on likely overseas outflows from local stocks, amid oil importers demand as crude prices scale high."

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading unchanged at 100.40.

According to traders, the macro-economic implications of the COVID-19 on the domestic economy are expected to be severe and investors are also concerned about the growing possibility of the second wave of the coronavirus.

"Performance of India's key macroeconomic data has deteriorated significantly. On the other hand, global financial markets have turned volatile due to growing possibility of the second wave of the coronavirus," said Rushabh Maru - Research Analyst, Anand Rathi Shares and Stock Brokers.

Maru further noted that "the tension is rising between the US and China as the latter failed to contain the pandemic. This might put pressure on the yuan. Hence the rupee may remain under pressure in the near term".

In India, the death toll due to COVID-19 rose to 3,029 and the number of cases climbed to 96,169, according to the health ministry.

Meanwhile, the number of cases around the world linked to the disease has crossed over 47.30 lakh and the death toll has topped 3.15 lakh.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 75.5634 and for rupee/euro at 81.6548. The reference rate for rupee/British pound was fixed at 92.2604 and for rupee/100 Japanese yen at 70.48.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, May 18 2020. 17:31 IST