Rupee ends at all-time low of 71.21 on global cues, high oil prices

WEAK TREND: A government official recently said the slide in the rupee is a short-term volatility and there is no need to be alarmed

MUMBAI: The Indian rupee reversed all the gains made earlier in the day to close at an all-time low of 71.21 per dollar on Monday, tracking a weak trend in some other global currencies along with concerns of a wider trade deficit and high oil prices.

On Friday, it had settled at 70.9971, 25 paise weaker than its previous close.

High oil prices along with outflow of foreign fund from the equity and bond market led to the rupee’s decline, said Anindya Banerjee, Deputy Vicepresident for Currency and Interest Rates with Kotak Securities.

According to provisional data from stock exchanges, foreign institutional investors sold scrips worth Rs 21.13 crore on Monday.

Edelweiss Securities’ Head of Forex and Rates Sajal Gupta said there was no intervention by the Reserve Bank of India (RBI) during the day. The RBI can intervene by selling dollars to stabilise a weakening rupee.

A Central government official, however, recently said that the slide in the rupee is a short-term volatility and there is no need to be alarmed.

Principal Economic Adviser to the Union Finance Ministry Sanjeev Sanyal said that if one takes the long-term view, the rupee is not depreciating against most world currencies and that in fact it is a case of strengthening of dollar rather than weakening of rupee.

Meanwhile, shedding the gains made earlier in the day, the Indian equity indices plunged nearly 1 per cent on Monday, with the S&P BSE Sensex losing 332.55 points, tracking similar global cues and a slowdown in the manufacturing sector.

Globally, investor sentiments were subdued owing to the concerns of escalations in the Us-china trade war, according to analysts.

The Nikkei India Manufacturing Purchasing Managers’ Index was registered at 51.7 in August, compared to 52.3 in July, which further dampened the domestic sentiments.

The indices had opened sharply higher on the back of healthy AprilJune GDP data released last week, but could not hold on to the gains.

Although the market saw a gradual decline from the highs throughout the day, a major drop in the indices occurred around the last hour of trade.

Heavy selling pressure was witnessed in banking, FMCG and auto stocks.

According to provisional data from stock exchanges, foreign institutional investors sold scrips worth Rs 21.13 crore on Monday. Edelweiss Securities’ Head of Forex and Rates Sajal Gupta said there was no intervention by the RBI