Indian Rupee: Plunges To Fresh Lows As Dollar Strengthens

The Indian rupee declined against the dollar in early trades on Wednesday, 23 May 2018 to hit a fresh 16-month low of 68.29 per dollar ahead of the minutes of US Federal Reserves last policy meet scheduled to be released later in the day. The greenback strengthened against most global currencies as investors await hints on the pace of further US monetary tightening amid sustained capital outflows. Weakness in the domestic stock market and demand for the US currency from importers also weighed on the rupee.

The rupee on Wednesday opened 14 paise lower at 68.18 against the US dollar. It dropped to 68.29 against the dollar and was last seen trading at 68.1950. Yesterday, the rupee had gained 8 paise to close at 68.04 against the US dollar on fresh selling of the American currency by banks and exporters.

Domestic benchmark indices extended early losses and hit fresh intraday low in morning trade. At 10:25 IST, the barometer index, the S&P BSE Sensex, was down 66.72 points or 0.19% at 34,584.52. The Nifty 50 index was down 41.70 points or 0.40% at 10,495. Negative cues from other Asian shares dampened investors sentiment. Overseas, Asian shares were trading lower after President Donald Trump said he was not satisfied with bilateral trade talks with China that occurred last week, but called them a start to working out the US trade imbalance with Beijing. Meanwhile, China announced on Tuesday that it would reduce tariffs on some vehicles to 15% from as much as 25%. Tariffs on certain automotive parts would also be cut. US stocks closed lower overnight as uncertainty over trade policy and other geopolitical issues remained high.

Meanwhile, the dollar rose against the other major currencies in Asia on Wednesday morning, after climbing to a fresh new high this year on Monday. The warming trade relations between the U.S. and China helped revive risk appetite. Markets also eye the Federal Reserves minutes that will come on Thursday in Asia to look for cues for rate hikes. The U.S. dollar index that tracks the greenback against a basket of six major currencies last stood at 93.62, up 0.12%.  On Monday, the greenback climbed to another fresh high this year at 93.91, testing the 94 level.