Rupee Falls To 16-Month Low Against US Dollar: 5 Things To Know

The Indian rupee (INR) today fell against the US dollar in volatile trade. In Karnataka election results, BJP is close to the majority mark. At day’s low, the rupee fell to 67.79 against the US dollar before recovering to 67.48 at day’s high. But the rupee could not sustain the gain and again slipped against the US dollar. The rupee was trading at 67.66 in afternoon trade against the US dollar. The stock markets also remained volatile today with Sensex rising as much as 436 points at day’s high, before paring bulk of the gains. Salil Datar, CEO and executive director of Essel Finance VKC Forex, said: “Crude prices continue to be a worry, but with a stronger BJP performance in the Karnataka election, we are expecting rupee to range between 67.30-67.80.”

Here are 5 things to know about dollar-rupee exchange rate:

1. The RBI likely sold US dollars via state banks at 67.67 level to stem the rupee fall, a Reuters report, citing dealers, said. The RBI typically intervenes in the foreign exchange market via state banks. “This time the intervention from RBI seemed quite decisive,” said a dealer at a foreign bank.

2. Year-to-date, the rupee is down over 5 per cent against the US dollar amid rising oil prices. Since India imports bulk of its oil requirement, upward movement in prices of crude oil puts pressure on domestic inflation and current account deficit.3. Annual retail and wholesale inflation accelerated in April, mainly due to higher fuel and food prices. Some economists changed their views to expect a more hawkish Reserve Bank at its next policy meeting next month.

4. The rupee has also been hurt by outflows from domestic capital markets. So far this month, foreign portfolio investors have sold net $1.6 billion in debt and $650 million in equity, according to forex advisory firm IFA Global.

5. In global markets, dollar was higher against a basket of six major currencies. The dollar index against a basket of six major currencies edged up 0.2 per cent to 92.792 as easing trade tensions helped shore up the US dollar. The US 10-year bond yield had inched higher on Monday, as optimism over President Donald Trump’s pledge to aid China’s ZTE Corp helped assuage US-China trade frictions.