The Indian rupee fell sharply today against the US dollar in line with its emerging market peers. Opening at 71.97 a dollar, the rupee fell to at its day’s low 72.25, clocking a fresh year low against the greenback. The rupee had closed at 71.66 on Friday. In afternoon trade, the rupee was trading at 72.03 against the US dollar, paring early losses. So far this year, the rupee is down about 3.5% against the US dollar. Indian equity market benchmarks Sensex and Nifty recovered amid after an initial spell of volatility.
Here are 5 things to know about rupee-dollar trade today:
1) Emerging market currencies, including the rupee, were under pressure amid another round of escalation in US-China trade war as both sides increased tariffs further. This escalation has dampened risk sentiment globally, with Asian equities falling sharply today.
2) Bond yields fell sharply while gold prices got a boost as investors sought the safety of bonds and precious metals. In India, gold prices hit a new high of ₹39,340 per 10 grams in futures markets, as the rupee weakened and the precious metal rallied in global markets.
3) After a spell of initial volatility, Indian equity markets were firm today, outperforming other global markets after the government announced a number of measures on Friday to shore up market sentiment and boost economic growth. Indian markets are down about 8% since from their June highs as foreign investors sold Indian equities over $3 billion in the past two months.
4) A Reuters poll, held earlier this month, showed sentiment towards most Asian currencies, including the rupee, worsened as a bitter tariff war between the world’s two biggest economies sent investors scurrying to safer assets, raised doubts about growth and rang recession alarms.
5) China’s yuan recovered after as comments by US President Donald Trump raised hopes for a de-escalation in the US-China trade war. Trump said China had contacted US trade officials overnight to say they wanted to return to the negotiating table. Earlier in the day, China’s yuan hit an 11-year low in onshore trade and tumbled to a record low in offshore trade after a sharp re-escalation in the U.S.-China trade war whacked investor confidence and darkened the global economic outlook. (With Agency Inputs)