Rupee closes 2 paise short of all-time low at 68.80
The Indian rupee on Monday closed just 2 paise short of its all-time low against the US dollar, tracking losses in global equity and currency markets.
The rupee ended at 68.80 a dollar, down 0.47% from its Friday’s close of 68.47. The currency opened at 68.49 and touched a high of 68.34 and a low of 68.80 a dollar.
Monday’s closing was just shy of 68.825, which was hit on August 28, 2013. In intraday, the record-low is 69.09, which was hit on Thursday.
Global markets fell after China’s manufacturing purchasing managers index (PMI) data released over the weekend missed estimates indicating that the ongoing trade war is starting to hurt exports. The PMI stood at 51.5 in June, versus 51.9 in May, and the forecast of 51.6 in a Bloomberg survey of economists.
In India, manufacturing sector activity in June grew at the fastest pace this year, supported by a rise in domestic and export orders, according to a monthly survey. The Nikkei India manufacturing PMI rose to 53.1 in June from 51.2 in May, registering the fastest improvement since December 2017.
Traders are cautious as the government is likely to announce this week the minimum support price for kharif crops, which could lead to inflationary pressures. Traders are also waiting for a July 6 deadline, when the US is scheduled to impose tariffs on $34 billion worth of Chinese goods.
“The lethal cocktail of rising crude oil prices, which directly exerts upward pressure on inflation and the current account def- icit or CAD, foreign portfolio investment or FPI outflows on tightening global liquidity along with rising US interest rates and a strong dollar is pushing the INR (rupee) to new lows,” said Nirmal Bang in a June 29 report.
Moreover, the global market in the current week will closely watch manufacturing and services PMIs of major economies, factory orders of the US and Germany and minutes of the US Federal Reserve meeting.
So far this year, the rupee has weakened 7%, while foreign investors have sold $875 million and $6.11 billion in equity and debt markets, respectively.
The 10-year bond yield closed at 7.912% against its Friday’s close of 7.901%. Bond yields and prices move in opposite directions.
The benchmark Sensex fell 0.45% or 159.07 points to 35,264.41. Since January, it has gained 3.5%.
Asian stocks declined sharply in June amid higher global bond yields and the mounting China-US trade friction that threatened global economic growth.
In the first half of 2018, the MSCI Asia-ex-Japan index fell 5.4%, marking its biggest drop in five years. The Asian markets saw a similar dismal performance in 2013 when the US Federal Reserve said it would unwind its monetary easing policy, stoking a broad sell-off in regional markets.
Trade tensions between two of the world’s biggest economies— the US and China—escalated last month keeping Asian markets on the edge.