Indian rupee depreciated by nearly 20 paise against dollar in early trade on Wednesday and hit its lowest level of 68.45 since February 2016. Market sentiments for rupee continued to remain weak on hopes that the US President-elect Donald Trump’s proposed fiscal expansion may boost inflation, prompting the Fed to raise rates more aggressively than previously expected.
The currency opened 13 paise down at 68.38 against dollar on account of buying of American currency by banks and importers. The US dollar strengthened further on Wednesday against a basket of major currencies due to strong US housing data that further strengthened hopes for a Federal Reserve rate hike in December and more tightening next year, leading to inflation.
Rajesh Cheruvu, head of equities, Sanctum Wealth Management said, “Historically, whenever there is surge in US dollar, currencies of emerging markets most specifically countries with high current account deficits have depreciated with high volatility. However, since 2014, Indian rupee has gained stability due to reasons like surge in forex reserves, lower imports and commodity prices. This has hurt the export competitiveness of Indian exports against its peers and over valuation of currency.” ..
Meanwhile, domestic equity markets opened in green following firm global cues. The BSE Sensex opened 140.55 points, or 0.54 per cent, up at 26101.33, while NSE Nifty opened 48.90 points, or 0.61 per cent, up at 8,051.20.
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