Rupee sinks 105 paise, worst fall since March

MUMBAI: The domestic currency crashed by over a rupee against the dollar on Friday to close at 73.47 — the biggest single-day fall since the post-pandemic crash on March 23, 2020. Bankers said that the rupee and government bonds fell in tandem with the selloff in equities and a surge in the dollar as global markets turned risk-averse.
The rupee currency opened weak at 73.47 against the dollar and soon slid to the day’s low of 73.5. It finally closed 105 paise lower at 73.47 as against Thursday’s close of 72.42. The weakening of the rupee has the potential to increase India’s crude bill and stoke inflation if crude prices remain where they are.

According to bankers, the financial markets had turned volatile much ahead of India’s GDP numbers being published, reacting to a surge in US bond yields. In the US, the yield on the benchmark treasury security rose to 1.6%, beating the dividend yield of the S&P 200. If returns on bonds stay high, there is a likelihood that global funds that were chasing yields could return from emerging markets to the US.
“We have seen the rupee appreciate immediately after the news that India’s defence minister stated they reached an agreement with China to disengage. The rupee hit a low of 72.70, which is the crucial support zone, and if it consistently trades below 72.70, then further downside is expected towards 72.50. However, if the pair respected the 72.70 mark, then we may see a bounce towards 73-73.15.” said Emkay Global Financial Services head (research – currency) Rahul Gupta.

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