Indian Rupee: Fresh Dollar Demand Weighs

Fresh demand for the greenback from importers and banks led rupee lower against the dollar in early trades on Tuesday, 29 May 2018. Foreign fund outflows coupled with a lower opening of the domestic equity market too weighed on the rupee.

The domestic currency weakened by 22 paise to 67.65 against the US dollar in early trade at the interbank forex market today. The currency fell further to a low of 67.75 and was last seen trading at 67.6850 in the spot currency market. Yesterday, the rupee had surged by 35 paise to end at a new two-week high of 67.43 against the US dollar after a surprise crash in crude prices quickly faded near-term trade deficit and inflation worries.

Domestic stocks nudged lower in early trade on negative Asian stocks. At 9:30 IST, the barometer index, the S&P BSE Sensex, was down 56.27 points or 0.16% at 35,109.21. The Nifty 50 index was down 18.30 points or 0.17% at 10,670.35.

Overseas, Asian stocks were trading lower as the political crisis in Italy worsened as a fresh election appeared likely in the eurozones third-largest economy. US markets remained closed yesterday, 28 May 2018 for Memorial Day. UK markets were also closed yesterday, 28 May 2018 for the spring bank holiday.

Meanwhile, the dollar dropped slightly against major currencies in Asia on Tuesday morning trade, despite the US dollar index surging once again above the 94 level the day before. The U.S. dollar index that tracks the greenback against a basket of six major currencies last stood at 94.32, down 0.03%. The dollar index climbed to this years high at 94.43 overnight, after news emerged that an on-again-off-again U.S.-North Korea summit is back on track.