Rupee Falls To Fresh 15-Month Low Vs Dollar, Breaches Key Level

The rupee traded in the range of 67.60 to 67.21 today against the US dollar

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NDTV Profit Team
Written by

NDTV Profit Team

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In a note, forex advisory firm IFA Global said markets would closely watch the results of the Karnataka elections.
"Post the Karnataka election result tomorrow, the rupee is likely to align with the domestic fundamentals and global US dollar performance," it added. Karnataka went to the polls on Saturday. Meanwhile, exit polls predict a hung assembly.
Anindya Banerjee of Kotak Securities said traders will react to the Karnataka election results. However, for the larger downtrend in the rupee to reverse, oil prices have to decline, he added. Amid concerns over rising oil prices, the rupee has fallen over 5 per cent against the US dollar since the beginning of this year.
Mr Banerjee predicted rupee to range between 66.70 and 67.70 on the spot market during this week.
Devendra Pant, chief economist of India Ratings, said: "Rupee is responding to higher current account deficit in FY19 due to higher crude prices. If present level of crude price stays for more than couple of months this will have an impact on current account deficit, which will have impact on inflation, fiscal deficit and growth."
Annual wholesale data released today showed that price inflation accelerated in April, helped by higher fuel and food product prices.
Annual wholesale price inflation last month rose to 3.18 percent from a year earlier, higher than a 2.47 percent rise in March, and an increase of 2.86 percent forecast by economists in a Reuters poll.
Industrial output data released on Friday showed growth slowed to a five-month low of 4.4 percent in March, dragged down by smaller increases in mining, but the RBI is expected to hold interest rates in its next policy meeting amid growing inflation concerns.
The weakening in the rupee comes today despite the dollar slipping against a basket of major currencies. The dollar eased 0.1 per cent to 92.408 versus a basket of six major currencies, retreating further from its 2018 peak hit last week on the back of sagging US yields, after softer economic data last week curbed prospects of aggressive rate hikes in the United States.
Global crude prices eased from over 3-year highs today as resistance emerged in Europe and Asia to US sanctions against major crude exporter Iran, while rising US drilling pointed to higher North American production. Benchmark Brent crude was down 40 cents at $76.72 a barrel. (With agency inputs)