Indian Rupee: Recovers Above Rs 68/$ Mark

The Indian rupee extended its losses further in early trades on Wednesday, 16 May 2018 but managed to rebound above the Rs 68 per dollar mark thereafter on fresh selling of the US currency by exporters and banks. However, dollars strength against other currencies overseas, as a surge in the benchmark 10-year Treasury yield above 3 per cent reignited a rally that had lost steam last week, capped the rupees gains.

The rupee rebounded by 27 paise to 67.80 per dollar and was last seen trading at 67.8750 in the spot currency market. Yesterday, the rupee had lost 56 paise, the second biggest single-day fall of 2018, to end at a new 16-month low of 68.07 as panic dollar demand rattled the currency market.

Domestic stocks began trading for the day on a weak note on negative Asian stocks. At 9:28 IST, the barometer index, the S&P BSE Sensex, was down 185.71 points or 0.52% at 35,358.23. The Nifty 50 index was down 49.05 points or 0.45% at 10,752.80. Overseas, Asian stocks were trading lower as geopolitical developments and rising benchmark US yields spurred a return of risk aversion. US stocks halted a four-day rally yesterday, 15 May 2018 with the steepest slide in almost two weeks as healthcare and tech shares retreated.

Meanwhile, the dollar rallied to hit five-months high overnight in Asia, and its momentum remained on Wednesday morning. The U.S. dollar index that tracks the greenback against a basket of six major currencies last stood at 93.20, up 0.06%. The dollar hit 93.32 on Tuesday night in Asia, the highest level this year. As the relations on the Korean peninsula improved and a full-blown trade war between the U.S. and China became less likely, investors turned to U.S. 10-year Treasury yields for cues.