Moneycontrol
May 18, 2017 01:28 PM IST | Source: Moneycontrol.com

Why the Indian rupee opened 20 paise weaker today?

At 12.52 IST, the rupee was trading at 64.35, 20 paise lower than its previous close of 64.15.

Why the Indian rupee opened 20 paise weaker today?

Pranay Lakshminarasimhan

Moneycontrol News

The rupee opened at 64.35 to the dollar, significantly weaker than analysts’ expectations as a rising risk-off sentiment globally triggered a slide in emerging market assets.

At 12.52 IST, the rupee was trading at 64.35, 20 paise lower than its previous close of 64.15.

Dealers said the risk-off sentiment was driven primarily by uncertainties surrounding the actions of US president Donald Trump’s administration. As a result, safe-haven currencies like the Japanese Yen appreciated in early trade on Thursday.

“There are doubts that the kind of growth people were expecting when Trump became president may not materialise now,” said a dealer with a foreign bank. “We may see most emerging market currencies depreciate further going ahead.”

Emerging market currencies like the Thai baht, Indonesian rupiah, Malaysian ringgit, and Russian ruble were trading 0.1 percent to 0.4 percent weaker against the dollar. The dollar index was trading at 97.70, 0.13 percent higher than its previous close.

Meanwhile, India’s benchmark equity indices -- Sensex and Nifty – were around 0.3 percent lower at 30,544.10 and 9,469.25,  respectively.

“Weakness in US equities is also a factor for the risk-off sentiment at the moment,” said Anindya Banerjee of Kotak Securities. “The rupee can weaken to around 64.70, plus or minus 20 paise, and then remain at that level for some time. However, for it to fall to 65 to the dollar or above, we would need a massive sell-off in local equities, which is unlikely.”
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