The Indian rupee (INR) today fell sharply against the US dollar (USD) today to go past 72-a-dollar mark again. Weak GDP data and a broad strengthening of the US dollar weighed on the Indian rupee. Further, a sharp fall in the domestic stock market indices Sensex and Nifty also put pressure on the rupee.
Opening at 71.97 a dollar, the rupee fell to 72.27 at day’s low, as compared to previous close of 71.40. Rupee’s weakness however sent gold and silver prices higher in domestic markets today. At 12:14 pm, the rupee was trading at 72.20 a dollar.
Here are 5 things to know about rupee dollar trade today:
1) Rupee was under pressure after data released on Friday showed India’s GDP growth falling to over a six-year low of 5% in the June quarter. Another private survey released on Monday showed India’s manufacturing sector hitting its slowest in 15 months in August as demand and output grew at their weakest pace in a year. The Nikkei Manufacturing Purchasing Managers’ Index, compiled by IHS Markit, declined to 51.4 in August from July’s 52.5, its weakest since May 2018. However, it has remained above the 50-mark separating growth from contraction for more than two years.
2) Weak GDP data weighed on Indian assets, including the rupee today, said forex advisory firm IFA Global. “Though a lot of weakness was already factored in, the GDP print came in way lower than even the most pessimistic of estimate,” it added.
3) A stronger dollar also weighed on the rupee today. The dollar index, which measures the greenback against a basket of six major currencies, was up nearly 0.4%, having climbed to a more than two-year high.
4) Forex traders will be looking ahead to comments from New York Fed’s John Williams on Wednesday and Fed chair Jerome Powell on Friday. The US jobs report is also due on Friday. The US Fed in July cut its interest rate for the first time this decade and traders expect another cut later this month amid global slowdown concerns.
5) The rupee is down about 3.5% against the US dollar so far this year amid outflows from domestic capital markets amid slowdown concerns. Broad outflows from emerging market assets also hurt the rupee. Indian rupee marked the worst monthly loss in August in six years against the US dollar amid foreign fund outflows and weaker domestic macro environment, says HDFC Securities in a note. Foreign funds withdrew $2.28 billion from domestic equity and bought $1.51 billion in debt market in the month of August, it added.