Indian Rupee: Weighed Down By Strengthening Dollar

The Indian rupee fell further against a strengthening dollar in early trades on Monday, 21 May 2018 after China and the US struck a deal to avert a trade war. Increased demand for the dollar from importers and banks after US Treasury Secretary Steven Mnuchin said the trade war with China was on hold, amid hopes of easing trade tensions between the two economies also weighed down the local unit. Higher crude oil prices and losses in Asian currencies too influenced rupee downtrend.

The rupee declined 12 paise to a fresh 16-month low of 68.12 against a strengthening US dollar in early trade today. The domestic unit registered an intra-day high and low of 68.07 and 68.16 respectively so far during the day. In the spot currency market, the Indian unit was last seen trading at 68.08. On Friday, the rupee had lost 30 paise to end at 68 against the US currency on renewed dollar buying interest amid global macro challenges.

Domestic benchmark indices were trading almost flat in early trade. At 9:28 IST, the barometer index, the S&P BSE Sensex, was down 8.27 points or 0.02% at 34,840.03. The Nifty 50 index was almost flat at 10,596.45. Overseas, most Asian shares were trading higher as weekend developments in the US-China trade relationship were digested by investors. US stocks closed mostly lower on Friday, 18 May 2018, as investors grappled with lingering uncertainty over trade negotiations between the US and China, as well as bond yields that climbed this week to the highest level since 2011.

Meanwhile, the dollar opened the week rallying against the other major currencies in Asia, climbing to a fresh new high this year. Risk appetite revived as the trade war between the worlds two biggest economies is also put n++on holdn++. The U.S. dollar index that tracks the greenback against a basket of six major currencies last stood at 93.79, up 0.21%. It was the highest level since mid-December last year.