The Indian rupee weakened further against the dollar in early trades on Monday, 18 June 2018, to hit a fresh three-week low of 68.16, owing to appreciation of the American currency overseas amid sustained foreign capital outflows. The dollars rise towards a seven-month high against a basket of its peers, as investors absorbed the escalation in trade tensions between the US and China, weighed on the rupee. However, a higher opening in the domestic equity market capped the losses.
The domestic currency weakened by 14 paise to 68.15 and dipped to a low of 68.16 before recovering to a high of 68.0025 so far during the day. In the spot, currency market, the Indian unit was last seen trading at 68.0175, still lingering within the 68 mark. The rupee had closed below the key 68-mark to end at 68.01 against the US currency in the previous session on Friday after the countrys trade deficit widened more than expected amid renewed global trade war fears.
Domestic benchmark indices were trading lower in early trade due to negative global cues. At 9:19 IST, the barometer index, the S&P BSE Sensex, was down 13.29 points or 0.04% at 35,608.85. The Nifty 50 index was down 4.05 points or 0.04% at 10,813.65.
Overseas, Asian shares fell as investors digested the escalation in trade tensions between the US and China after both countries announced tariffs last week. Markets in China, Hong Kong, Taiwan and Indonesia were closed on Monday for holidays. Trump administration last week said it will impose a 25% tariff on a list of 818 items of Chinese goods worth around $ 34 billion beginning 6 July. Measures affecting an additional 284 products worth $ 16 billion will be subject to review before taking effect.
Meanwhile, the dollar edged up towards a seven-month high against a basket of its peers on Monday after the market digested a flurry of news, although U.S.-China trade tensions slowed its gains. The dollar index versus a basket of six major currencies crept up 0.1 per cent to 94.882. The index was in reach of 95.131, a seven-month peak scaled on Friday when it soared more than 1 per cent last week after the US Federal Reserve gave a hawkish signal on interest rates while the European Central Bank struck a dovish tone.