Rupee continues downward spiral amid capital flight

The Indian rupee extended its losing run for the second straight day, falling by another 15 paise to end at a near 7-month low of 65.64 against the US dollar amid persistent capital outflows and a fresh ripple of geopolitical tensions.

Headwinds in the form of consistent widening in the trade deficit accompanied by portfolio outflows amid unsupportive global factors kept overall sentiment highly bearish.

Country's trade deficit hit $13.69 billion in March, climbing from $11.98 billion in February.

This is the weakest close for the Indian currency since September 27, 2017 when it had ended at 65.72.

Despite a positive start to trade, it fell victim to panic reaction to touch a fresh intra-day low of 65.70 a dollar. Consistent capital outflows from domestic equities against the grim backdrop of the ongoing geopolitical tensions between the US and Russia over the Syria strikes further dampened the trading mood.

Also, participants remained cautious about possibility that the adverse US trade and monetary policy will have a substantial impact on the Indian economy against the grim backdrop of a global trade war and a fasterthan-expected tightening of US monetary policy.

Renewed spike in crude prices on growing worries over supply disruptions especially in the Middle East and falling output too largely weighed on the trading front. The rupee has been the worst performing Asian currency this year after strengthening over 6 per cent in 2017. It has already lost 2.77 per cent of value against the US dollar and trading at multi-month lows after making a strong starts to the year. In the meantime, the greenback staged a spirited comeback after a short-lived downtrend pressure ahead of key US macro releases even as the market's focus shifted back to US trade policy.