Indian Rupee: Breaches 66/$ Levels Due To Subdued Forex Sentiments

The Indian rupee descended against the dollar in early trades on Friday to breach the 66-level and hit its 13-month low of 66.05 due to appreciation of the U.S. currency overseas. Increased demand for the dollar from importers also put pressure on the domestic unit. Meanwhile, the minutes of the last meeting of the Monetary Policy Committee (MPC) indicated the Reserve Bank of India may shift to a hawkish monetary stance in June. Persistent foreign fund outflows and a lower opening of the domestic equity market have led the rupee lower.

The domestic currency dropped to a low of 66.10 before rebounding to an intra day high of 66.00 so far during the day. The Indian unit was last seen trading at 66.03. On Thursday, the rupee had lost 14 paise to close at a fresh 13-month low of ₹65.80 as growing worries over higher crude prices and likely fiscal slippages led to subdued forex market sentiments.

A bout of volatility was witnessed in early trade as the key benchmark indices sink in negative zone after a positive start to the days trading session. At 9:18 IST, the barometer index, the S&P BSE Sensex, was down 16.20 points or 0.05% at 34,411.09. The Nifty 50 index was down 3.30 points or 0.03% at 10,562.

Overseas, Asian stocks fell with technology stocks leading the way following a downbeat outlook from Taiwan Semiconductor Manufacturing Co. Inflation remained weak in Japan. Core consumer prices rose 0.9% from a year earlier in March, versus Februarys reading of 1%. US stocks ended lower yesterday, 19 April 2018 with consumer staples, real estate and technology shares leading the losses.

Meanwhile, the dollar rallied against other major Asian currencies on Friday morning. The U.S. dollar index that tracks the greenback against a basket of six major currencies last stood at 89.73, up 0.10%. The dollar rose alongside with the 10-year U.S. treasury yield that climbed to 2.9%, nearing mid-February high. Meanwhile, U.S. President Donald Trump made no new fresh demands on trade at his meeting with Japanese Prime Minister Shinzo Abe earlier this week.