RUPEE SLUMPS TO AN ALLTIME CLOSING LOW VERSUS DOLLAR

MUMBAI: The Indian rupee on Thursday closed at a record low against the US dollar, tracking losses across Asia ahead of the tit-for-tat tariffs by Washington and Beijing are implemented, besides key US data.

The rupee ended at 68.94 against the dollar, down 0.29% from its previous close of 68.74. It opened at 68.75 and touched an intraday low of 69.01. The rupee had hit an all-time closing low of 68.825 on August 28, 2013. It hit a record intraday low of 69.09 on June 28, 2018.

The US is scheduled to impose tariffs on $34 billion of Chinese goods on Friday. Traders are also awaiting minutes of the US Fed meeting to be released on Thursday. The non-farm payrolls data is expected on Friday.

The fall in rupee and bond prices was also affected by the Indian government’s Wednesday announcement of a sharp hike in the minimum support price for various corps, ranging from 13% for paddy to 53% for ragi. Traders feared that the MSP increase may lead to inflation quickening.

The move comes ahead of crucial elections in Madhya Pradesh, Chhattisgarh and Rajasthan later this year, and the general elections in May 2019.

“As feared, the same is expected to contribute to inflationary pressures in the economy and the MPC (monetary policy committee) response at the next policy review will be crucial,” said Edelweiss Securities in a statement.

Earlier, the RBI’S June meeting minutes signalled that the central bank will rely on data for future rate hike decisions. “For the Reserve Bank of India, MSP increases pose an additional risk to their inflation view, besides fiscal slippage worries and higher oil prices,” said Radhika Rao, economist, DBS Bank Ltd.