Rupee drops 24 paise to 68.66 against US dollar amid equity meltdown
Mumbai: The rupee on Monday declined by 24 paise to close at 68.66 against the US dollar, cutting short its three winning run due to a massive selloff in equities and weakening expectations of a rate cut by the US Federal Reserve in near future.
Foreign institutional investors pulled out Rs 401.99 crore on Monday, hitting the rupee sentiment.
Emerging market currencies took a hit after the US job data fuelled expectations that the Federal Reserve will not cut interest rates quickly in near future. The US dollar traded strong against its rivals, and Asian currencies.
Investors sentiment was subdued on concerns that increased surcharge on super-rich could affect foreign funds investing in India, which could lead to flight of foreign funds from the domestic markets, currency traders said.
The rupee opened lower at 68.49 from the last close of 68.42 at the inter-bank foreign exchange (forex) market.
The local unit lost further ground to touch a session low of 68.76 before closing at 68.66, marking a fall of 24 paise over its previous close. The rupee on Friday settled 8 paise higher at 68.42 against the dollar.
"Rupee follows the path of emerging-market currencies, as markets start to rethink the extent and speed of rate cuts by the Federal Reserve. Regional stocks also traded weaker as budget Blues continue," V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities, said.
The 30-share Sensex tanked 907 points in the intra-day trade before settling at 38,720.57 points, showing a sharp loss of 792.82 points or 2.01 per cent. The broader Nifty of the NSE tanked 252.55 points, or 2.14 per cent, to close at 11,558.60 points.
The 10-year government bond yield was at 6.60 per cent.
"...bond market traded higher amid lower than estimated fiscal deficit number and proposal of foreign currency bond issuance. Finance Secretary Subhash Chandra Garg said that government is targeting the second half of the fiscal year to raise funds through overseas bond sales," Sharma said.
Brent crude futures, the global oil benchmark, slipped 0.16 per cent to USD 64.33 per barrel.
