Mumbai: The Indian rupee on Tuesday weakened further against the US dollar, tracking losses in global equity and currency markets. At 9.15am, the rupee was trading at 68.92 a dollar, down 0.19% from its previous close of 68.80. The currency opened at 68.81 and touched a high of 68.81 and a low of 68.94 a dollar. Global currencies declined led by Chinese yuan as a lack of progress on resolving the US-China trade dispute before a tariff deadline on Friday fuelled trade war concerns.
Overnight, Bloomberg reported said that the Trump administration moved against letting China Mobile enter the US telecommunications market, escalating tension before US levies on $34 billion of Chinese imports are set to take effect on 6 July.
Traders are also cautious as the government is likely to announce this week the minimum support price for kharif crops, which could lead to inflationary pressures. Moreover, investors will also focus on minutes of the last US Federal Reserve meeting.
“The fundamental mix will remain negative for the Indian rupee in the immediate future, with escalating trade war fears between the US and China adding to some domestic challenges and external pressures from high oil prices”, said Priyanka Kishore, head of India and South East Asia economics Singapore in Oxford Economics report.
Oxford Economics said that it has lowered its year-end forecast for the rupee vs. US dollar to 68 (from 66.3), with a view that it will potentially test 70 before that. The report said it dose not expect the Reserve Bank of India (RBI) to defend a particular level or hike aggressively to support the rupee.
So far this year, the rupee has weakened 7.4% against the US dollar, while foreign investors have sold $621.50 million and $6.11 billion in equity and debt markets respectively.
The 10-year bond yield stood at 7.899%, from its Monday’s close of 7.912%. Bond yields and prices move in opposite directions.
Benchmark Sensex Index rose 0.16% or 54.72 points to 35,319.13. Since January, it has gained 3.5%
Asian currencies were trading lower. China Renminbi was down 0.55%, China Offshore 0.5%, Taiwan dollar 0.31%, South Korean won 0.29%, Thai Baht 0.29%, Indonesian rupiah 0.27%, Malaysian ringgit 0.25%, Philippines peso 0.22%, Singapore dollar 0.22%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.913, up 0.04% from its previous close of 94.87.
Bloomberg contributed this story