Indian Currency: The direct impact of the ongoing turmoil in the international market is being seen on the Indian currency. The rupee has fallen 3.54% so far this year, making it Asia’s second worst performing currency. There are many major reasons behind the fall of rupee – selling by foreign investors, strengthening of the US dollar and fluctuations in crude oil prices.
Rupee fell even today
During early trade on Wednesday, the rupee slipped 15 paise to 88.65 per dollar. According to forex traders, the expectation regarding the US-India trade deal supported the rupee to some extent, but pressure remained due to the strength of the dollar.
In the interbank foreign exchange market, the rupee opened at 88.61, and later fell by 15 paise to 88.65. A day earlier, i.e. on Tuesday, the rupee had closed at 88.50 per dollar. The dollar index, which gauges the US dollar’s position against six major currencies, rose 0.06% to 99.50. The strength of the dollar continues to put pressure on the currencies of emerging markets.
What do market experts say?
Anuj Chaudhary, Research Analyst, Mirae Asset Sharekhan, says that the main reason behind the rise in rupee seen a day earlier i.e. on Tuesday was the increased tendency to take risks in the global markets and the weakness of the dollar. He said that expectations of the US government’s ‘shutdown’ ending soon have strengthened the sentiment in the global market.
Anuj Chaudhary said that due to the rise in global markets and weakness in the dollar in the coming sessions, the trend of rupee may remain positive to some extent. However, he added that higher crude oil prices and dollar demand from importers could limit the rupee’s gains. At the same time, HDFC Securities Research Analyst Dilip Parmar believes that the main reason for the recent strengthening of the rupee is the statements of US President Donald Trump.
There was momentum in the stock market
However, expectations of the US shutdown ending soon have created a bullish atmosphere in the Indian stock market.
- Sensex jumped by 502.82 points to reach 84,374.14 points.
- Nifty 50 was also trading at the level of 25,839 with a gain of 144.05 points.
In the international market, Brent crude fell by 0.26% to $ 65 per barrel. At the same time, foreign institutional investors (FIIs) sold shares worth Rs 803 crore on Tuesday, which increased further pressure on the rupee.
Why did the rupee weaken?
- US dollar strength
- Selling by foreign investors
- global economic uncertainty
- Crude oil fluctuations
The Indian rupee is currently under pressure, but experts believe that due to the US-India trade deal and the strength of the domestic market, some stability may return to the currency in the coming weeks.
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