Rupee Opens at Two-Month Low on Weak US Economic Data

On Wednesday, the Indian currency opened at Rs.71.78 before touching at Rs.71.79 a dollar, recording its lowest level in nearly two months. The last time the rupee stooped to this level was on 17 September 2019.

The decline in the rupee value against the US dollar can be attributed to the weak US macro-economic data coupled with market speculations over the prolonged US-China trade dispute.

In September, the dip in the rupee value could be attributed to the contracted factory output in India, which stood at 4.3% for the second consecutive month.

The weak industrial production numbers have also led to experts and analysts forecasting economic growth lesser than 5% in the third quarter. The gross domestic product data for Q3 FY 2019 will be released later during the month.

Also Read: RBI’s Move to Curb Foreign Dominance on Rupee Derivatives

Industry experts also expect the Reserve Bank of India to slash its key repo rates by almost 25 basis points (bps) to tackle the inflation concerns in its next bi-monthly monetary policy meeting in December 2019.

Since the beginning of the year, India has witnessed a 2.6% decline in the rupee value so far. As far as the investment sector is concerned, foreign portfolio investors accounted for over $5.32 billion and $11.60 billion in debt and Indian equities during the year.

At the global level, Asian currencies are losing their ground against the US dollar with US President Donald Trump threatening the Chinese counterparts with increased tariffs on imports.

For any clarifications/feedback on the topic, please contact the writer at viswanathan.v@cleartax.in

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