₹ CRASHES TO SIX-MONTH LOW

MUMBAI: The rupee on Monday suffered a yet another blow to plunge by a whopping 31 paise at a fresh six- month low of 65.10 a dollar after heavy buying of the US currency and concerns on the macro-economic front.

This was the weakest closing for the home currency since March 24, when it had ended at 65.41 against the greenback.

Besides panic dollar buying by corporates and importers, fears over fund outflows from domestic capital market led to weakened forex market sentiment against the backdrop of imminent Fed rate hike and unwinding of its stimulus measures amid unsupportive global factors.

The US Federal Reserve reaffirmed its intention to hike rates in December and normalising its crisis-era stimulus programme into reverse from next month last week and since then the dollar has been under pressure.

Hardening speculation of widening fiscal deficit after the government indicated a stimulus package meant to jump- start the nation's ailing economy put trading mood into further disarray.

The GDP expansion hit a three-year low of 5.7 per cent in the April-june quarter with India losing the fastest-growing economy tag to China for the second straight quarter.

Besides falling GDP growth rate, exports are facing strong headwinds and the industrial expansion hit the lowest in five years.

There is an increased speculation over a possible fiscal stimulus which can go above Rs 40,000 crore after six successive quarters of dip in the economic growth.

Foreign investors and funds remained in exit mode as they have pulled out nearly Rs 5,500 crore from local equities so far this month due to geopolitical concerns and a tendency to take profit.

The domestic currency got hammered last week, depreciating by a steep 71 paise against the US dollar - the biggest since November 2016.

In the meantime, country's foreign exchange (forex) reserves surged by $1,782.5 million as on September 15, according to the latest RBI data. Total reserves were $402.5 billion, against $400.726 billion in the previous week.

Domestic bourses endured panic sell-offs for the second straight session as risk aversion dominated trading sentiment with North Korea and the US engaging in war of words.

Panic unwinding sent the flagship Sensex tumbling by a whopping 296 points to end at 31,626.63, while Nifty crumbled over 91 points to 9,872.60.

In line with the dominant bearish trend, the rupee opened on a weak note at 64.84 from weekend close of 64.79 at the Interbank Foreign Exchange (Forex) market on sustained dollar demand.

But, more quickly than expected, it bounced backed with renewed strength to touch a high of 64.72 on easing dollar pressure.

However, wiping out all mid-afternoon gains, the local currency retreated sharply to breach the key significant 65-mark to hit a fresh intraday low of 65.19 before ending at 65.10, showing a steep loss of 31 paise, or 0.48 per cent.

It had clawed back some of its lost ground from its near 6-month low and ended a marginal 2 paise higher at 64.79.

The RBI, meanwhile, fixed the reference rate for the dollar at 64.8357 and for the euro at 77.3036.