Rupee tumbles 28 paise, opens at lowest level since Sept 17 vs US dollar

Topics Rupee vs dollar

The rupee on Wednesday opened 28 paise lower at 71.75 against the US dollar amid growing worries US-China trade talks are stalling after US President Donald Trump failed to deliver any new information about when the two countries would sign a trade deal. It was the Indian currency's lowest opening level since September 17.

The rupee on Monday tumbled by 19 paise to a near one-month low of 71.47 as fresh concerns over US-China trade deal and Hong Kong unrest kept forex market participants edgy. Investors also played their bets cautiously in view of India's rating outlook cut by Moody's investors Services last week. 

The forex market was closed on Tuesday on account of Guru Nanak Jayanti. 

In the capital market, foreign institutional investors (FIIs) purchased shares worth Rs 664.2 crore on Monday while domestic investors (DIIs) sold shares woth Rs 245.06 crore, according to provisional exchange data.

Rupee continued to remain under pressure against the US dollar after a dismal industrial production number that was released on Monday. Data showed IIP contracted 4.3 per cent in September, its lowest level in last eight years. The decline was steeper than the 1.4 per cent reduction seen in August, suggesting that the economy may have slumped further in the second quarter of the current financial year. On the domestic front, market participants will be keeping an eye on the inflation number and pick up the number could further weigh on the rupee, said Gaurang Somaiya, Research Analyst (Currency) at Motilal Oswal Financial Services (MOFSL). 

"Today, USD/INR pair is expected to quote in the range of 71.50 and 72.20," Somaiya added. 

On the global front, Asian stocks and Wall Street futures fell on Wednesday, as growing worries that US-China trade talks are stalling and concern about intensifying unrest in Hong Kong hurt demand for risky assets.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.01 per cent to the lowest in more than a week. Hong Kong shares slumped 1.8 per cent to a two-week low, battered by fears that anti-government protests appear to be spiraling out of control, said a Reuters report. 

In commodities, oil prices fell as diminishing prospects for an immediate resolution to a 16-month long trade war between the world’s two-largest economies suggested less demand for energy in the future, the Reuters report added.

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