Monday, May 06, 2024 | Last Update : 02:31 PM IST
Rupee sheds 62 paise, falls to 11-week low
The Indian currency had opened at 70.12 a dollar and hit a low of 70.54 during the day as oil prices rose over one per cent in global markets.
Mumbai: Concerns of escalating trade war between the United States and China, waning risk appetite of foreign investors and rising Brent crude prices, weighed on the rupee that tumbled 62 paise, or 0.37 per cent, to 70.53 per dollar on Monday versus its previous close of 69.91. Currency experts expect the rupee to remain volatile till the outcome of the general elections next week.
China is striking back at the US as the trade war between the world's two biggest economies continues to escalate. Beijing on Monday said that it would raise tariffs on roughly $60 billion worth of US goods on June 1. The move follows Friday's increase in US tariffs on $200 billion worth of Chinese exports from 10 per cent to 25 per cent. The trade dispute, which began last July, has hurt Chinese exporters, damaged some US companies and slowed global growth.
Monday’s close was a level last seen on March 1. The Indian currency had opened at 70.12 a dollar and hit a low of 70.54 during the day as oil prices rose over one per cent in global markets.
Other Asian currencies too traded lower amid the trade war tensions. However despite the uptrend in the rupee and Brent crude prices, the bond yields eased during the second half of the day on unconfirmed news reports that the Reserve Bank of India may be changing its liquidity stance from neutral to surplus. Yields eased more towards the shorter end of the curve--3 to 5 year bonds. In addition, weak industrial production and with retail inflation remaining within the RBI’s permissible level made a case for the central bank to cut rates in the next policy which too helped ease bond yields.
Madhavi Arora, lead economist Edelweiss Securities, forex and rates, said, “The rupee weakness is largely on the back of waning global risk appetite, trade war escalation and uptrend in Brent crude prices. Besides domestic event risk in the form of Union election outcome has also kept investors wary on the INR positioning.”
“The pressure on the rupee could continue in the near term and the rupee could head towards 71 plus depending on the election outcome,” added Arora.
Brent crude futures, the global oil benchmark, rose 1.57 per cent to $71.73 per barrel due to simmering tensions in the Middle East.
