New Delhi: As the rupee weakened against the US dollar and markets closed deep in the red on Monday despite a series of measures announced by the government over the weekend, Finance Minister Arun Jaitley said it was due to global phenomena occurring owing to squeeze on oil production and the US-China trade war.
“These are impacts of a very significant ongoing global phenomena. You have at least three, if not more, indications of the nature of things which are happening globally,” he told reporters here. “One is the squeeze which has been put on oil production, upsetting the demand-supply ratio which is increasing the crude oil prices. “The second is the trade war and we don’t know when we are going to see the end of it. It, of course, impacts a major currency in our region – China (sic),” Jaitley said. He said the two factors coupled with the internal economic decisions in the US were leading to further strengthening of the dollar. “…the dollar significantly strengthened this morning and that has significant impact on currencies in the region,” the Finance Minister said.
Sensex lost more than 500 points and the NSE Nifty50 slipped by around 140 points on Monday. The rupee also weakened against the US dollar and ended at 72.51 a dollar, down from its previous close of 71.86. The government had on Friday announced a series of steps to support the rupee and curb the widening current account deficit including relaxing overseas borrowing restrictions and limiting non-essential imports.