Published: Thu, October 04, 2018
Money | By Ralph Mccoy

Rupee plunges to fresh record low of 73.77 against dollar

Rupee plunges to fresh record low of 73.77 against dollar

First of all, the heavy selling in markets is based on macro factors like weakening Indian rupee against the United States dollar and it is showing no inclination to strengthen.

The worldwide benchmark Brent crude breached the U.S. 86 per barrel level, near its four-year high. On Wednesday it had plunged by 43 paise to breach the historic low of 73 level.

Amid rising crude oil prices leading to increasing demand for the American currency, the value of rupee against dollar has been falling.

The markets will remain closed on Tuesday on account of Gandhi Jayanti. Weaker long-term sentiment has weighed on the won, which is closely tied to China though Korea's electronics exports, which may be at risk from the US-China trade war.

She said: "For bond markets, a 25 bps hike accompanied by a hawkish stance could trigger the 10-year bond yield to rise to 8.25 percent".

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Mr Khoon Goh, head of Asia research at ANZ Banking Group in Singapore, said the mix of strong USA data and the Fed chair's comments bumped up the dollar and USA bond yields, putting downward pressure on Asian currencies.

The Indian rupee is the worst performing Asian currency this year, having lost more than 13 per cent.

Investors were cautious as the three-day RBI policy review began Wednesday.

The Reserve Bank of India (RBI) is expected to raise rates for a third time since June on Friday to combat inflationary pressures as it grapples with a weakening rupee, surging oil prices and market instability sparked by a major non-bank finance firm's defaults. Of 15 economists surveyed by Mint, 14 expect the RBI to raise the repo rate, the rate at which it lends to commercial banks, to 6.75%.

So far this year, the rupee has declined 12.07% and foreign investors have sold $2.01 billion and $7.11 billion in the equity and debt markets, respectively.

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