Rupee Inches Closer To 85 With New Record Closing Low
Rupee's range is anticipated between 84.75 and 85.05, said Jateen Trivedi of LKP Securities.
Indian rupee closed at a new record closing low of 84.90 against the US dollar, merely 10 paise away from the 85-mark, on Tuesday as global cues and dismal domestic trade data weighed on the currency. The Indian currency opened at 84.90, after Monday's close of 84.87, before falling to the day's low of 84.93.
The rupee's range is anticipated between 84.75 and 85.05, said Jateen Trivedi, vice president, research analyst-commodity and currency, LKP Securities.
"While weak Asian cues weighed on market sentiment, the record high trade deficit in November pushed the rupee to a new low which caused investors to run for cover, triggering panic selling in domestic equities," said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.
India's merchandise trade deficit widened to a record high of $37.8 billion in November, against $27.1 billion in October, led by a jump in gold imports, showed government data. Exports fell by 4.9% year-on-year to $32.1 billion, while imports rose 27% year-on-year to $69.95 billion during the month under review.
"We expect the sentiment to remain cautious with a weak bias over the next few days as investors await the US FOMC meeting outcome," Tapse said.
The Federal Open Market Committee began its last meeting of the year today, with policy rate announcement scheduled for Wednesday. Markets are expecting the Federal Reserve Chair Jerome Powell to announce a quarter-point cut when he takes the stage on Dec. 18.
"While a 25 bps rate cut has already been factored in, forward commentary and projections will be key. A dovish tone could push the dollar index lower, providing relief for the rupee. However, any uncertain or hawkish remarks may strengthen the dollar and keep participants bearish on the rupee," Trivedi said.
The dollar index, which measures the US dollar against a basket of popular currencies, was 0.16% higher at 107.03.
