The rupee on Friday Nov 18,2016 crashed below the psychological 68-mark to end at near
nine-month low as sentiment turned bearish on combination of growing US
rate hike expectations and stunning dollar run.
Witnessing a near-term rout, the home currency crumbled by a whopping 31
paise to end at 68.13 against the US dollar — the lowest closing since
February 29,2016
Imminent higher interest rate environment arising out of the US Federal
Reserve’s hawkish tone along with heavy capital outflows took a toll on
the rupee, a forex dealer said.
Frantic dollar demand from importers and corporates mainly pressurised the home unit, the dealer said.
The US Dollar rallied to the highest level in 14 years against all major
counterparts after Fed Chair Janet Yellen reiterated that the US
interest rates could rise “relatively soon” due to an improving domestic
labour market and stronger growth.
Foreign portfolio investors (FPIs) remained net sellers and sold shares worth a net Rs. 926 crore today.
The domestic currency opened substantially lower at 68 from overnight
closing level of 67.82 at the Interbank Foreign Exchange due to strong
dollar demand in the wake of sustained foreign capital outflows.
It remained under immense pressure throughout the day and encountered
extreme volatile momentum, plunging to fresh intra-day low of 68.19 in
late afternoon deals before ending at 68.13, showing a steep loss of 31
paise, or 46 per cent.
Last Friday, the rupee had breached the 67 level on huge capital
outflows in line with other emerging markets after expectations that
Donald Trump’s new administration will increase fiscal stimulus which
could lead to higher interest rates in the US.
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