Rupee hits near 5-year low of 68.80 per $ on macro worries

Source: The Hitavada      Date: 03 Jul 2018 09:37:21



THE battered rupee on Monday suffered yet another blow by plunging 34 paise to end at a near five-year low of 68.80 against the buoyant US dollar in the midst of weak global trends and concerns on macro-economic front.This is the level last seen on 28 August, 2013.
With very little chance of RBI intervention, panic dollar demand from importers and speculative traders sent the home currency sinking to a low of 68.81 in late afternoon deals. Although the initial gains had been short-lived. It touched a high of 68.33 in morning deals.

The rupee had tumbled below the 69-mark for the first time ever on Thursday and hit a life-time low of 69.10.
The Asia’s third-largest economy, India is facing severe macro challenges and goldilocks economic conditions are now changing fast against the grim backdrop of bubbling global crude prices and most likely to disrupt the Government’s fiscal maths and poses additional upside risks to inflation forecast. Trade worries were at the heart of currency market weakness.

Dollar strengthened broadly in Asian session despite an escalating trade tensions between US and China as market is pricing on Fed rate path is largely unchanged.
At the interbank foreign exchange (forex) market, the Indian unit resumed a tad lower at 68.48 against weekend's close of 68.46 on mild dollar selling by banks and exporters. But quickly bounced back to hit a session high of 68.33 briefly, but the recovery fell short of changing the negative tone.

Tracking the unfavourable situation surrounding the overall forex sentiment, the local unit plunged to an intra-day low 68.81 towards the fag-end trade before closing at 68.80, revealing a steep loss of 34 paise, or 0.50 per cent.
The RBI, meanwhile, fixed the reference rate for the dollar at 68.6227 and for the euro at 79.9592.

The bond market also lost ground and the 10-year benchmark bond yield edged up to 7.91 per cent.
The dollar index, which measures the Greenback’s value against basket of six major currencies, was down at 94.74.
In the cross currency trade, the rupee fell back against the pound sterling to finish at 90.47 per pound from 89.98 and retreated against the Japanese yen to settle at 62.11 per 100 yen from 61.90 yesterday.

The local currency dropped further against the euro to close at 80.04 as compared to 79.78.
Elsewhere, the common currency euro is trading lower against the greenback largely impacted by renewed political crisis in Germany.

The British pound also remained under pressure against the back drop of growing Brexit uncertainties, though better than expected UK manufacturing PMI print limited the slide.
In forward market today, The benchmark six-month forward premium payable in November and the far-forward May 2019 contract settled at 122-124 paise and 271-273 paise, respectively.