According to a Reuters poll, a slowing domestic economy will prevent rupee from recouping this year’s losses against the dollar in 2020, with optimism around an easing in the US-China trade dispute not enough to give it a further boost.
"After falling nearly 9 per cent in 2018, the Indian currency has shed another 4 per cent this year to touch a 2019 trough of 72.40 per dollar on September 3. It has since popped up over 2 per cent, along with other emerging market currencies, on hopes of a possible trade deal between the world’s two largest economies. But nothing has been agreed yet, let alone a meeting scheduled," the report added.
A slew of rate cuts by the Reserve Bank of India (RBI) has done nothing concrete so far to revive a slowing Indian economy, the report further said.
“We expect the rupee to weaken as risks of sluggish growth and fiscal slippage intensify,” Reuters reported quoting Rini Sen, India economist at ANZ, as saying. “Stable portfolio flows led by equities and global cues like trade negotiations, on top of rate cuts, have led to bouts of optimism. However, we think the currency market is under-pricing downside risks to domestic growth," Sen added.
On the global front, Asian shares paused near multi-month peaks on Thursday while bonds eked out a bounce as reports of delays in sealing a preliminary Sino-US trade deal left investors frustrated at the lack of concrete progress.
In commodities, oil prices were unchanged after overnight losses amid caution over trade talks. Brent crude futures were flat at $61.74 a barrel. Prices fell $1.22, or almost 2 per cent on Wednesday. West Texas Intermediate crude futures were at $56.32 a barrel, down 3 cents from their last close, Reuters report said.