Friday, Dec 06, 2019 | Last Update : 09:47 AM IST

Rupee tumbles 62 paise, could remain weak

THE ASIAN AGE. | FALAKNAAZ SYED
Published : Nov 14, 2019, 4:23 am IST
Updated : Nov 14, 2019, 4:23 am IST

The numbers highlighted the persistent structural slowdown in the economy and firmed expectation of further monetary easing by the RBI.

According to forex experts, the rupee would continue to remain weak on global and domestic concerns.
 According to forex experts, the rupee would continue to remain weak on global and domestic concerns.

Mumbai: The rupee extended its bearish leg against the US Dollar tracking weakness in the Yuan and growing concerns over health of the domestic economy amid soft capital market sentiments and anticipating FPI outflows. The rupee tumbled by 62 paise or 0.87 per cent to breach 72 per dollar mark and ended at over two-month low of 72.09 on Wednesday.

After opening lower at 71.75 against the greenback, the rupee fell to as much as 72.10 in intraday deals. On Monday, the currency had closed at 71.47 against the dollar. Forex market was closed on Tuesday for Guru Nanak Jayanti. According to forex experts, the rupee would continue to remain weak on global and domestic concerns.

Showing signs of sluggishness in the domestic economy, the industrial production shrank in September to 4.3 per cent in September from 1.1 per cent contraction in July, data released by Central Statistics Office showed on Tuesday, registering the weakest performance in seven years due to output decline in manufacturing, mining and electricity sectors.

The numbers highlighted the persistent structural slowdown in the economy and firmed expectation of further monetary easing by the RBI.

This lowered the demand for domestic assets. Domestic equities ended with 0.60 per cent cut while the benchmark bond yield came lower by 3 basis points to 6.52 per cent.

The Dollar Index, which tracks the greenback against a basket of six major currencies rose by 0.02 per cent to 98.32 compared with previous close of 98.25.

The greenback gained against major counterparts after the US President Donald Trump said a trade deal with China was "close" but warned that he would "substantially raise" tariffs if the deal collapses making investors concerned over the uncertainty in US-China trade deal. He dubbed China a cheater on trade.

Harihar Krishnamoor-thy, treasurer with FirstRand Bank said, “All Asian currencies are looking weak. If the US-China trade deal goes through, the US interest rates will rise and some amount of rupee weakness could continue as dollar-index is strengthening. Global capital inflows could fall. The trading range could rise from 71-72 to 71.50 to 73 in the short term. As the rupee weakens, exporters might look to sell the dollars and book their export receivables.”

Abhishek Bansal, Chairman, ABans Group of Companies said, “The Indian rupee is under pressure after India's credit ratings outlook was cut to negative from stable by Moody's Investors Service. Growing debt burden and the government's struggle to narrow the budget deficit are the critical reason. A slump in factory production has increased probability of a sharper rate cut by Reserve Bank of India. India’s factory output contracted to 4.3 per cent in September (for the second consecutive month), which is lowest since 2012.”

Tags: indian rupee, us dollar