Globally, the dollar rose on reports of a build-up of Russian troops near the border with Ukraine; Also, signs of FIIs booking profits on Indian equities and debt markets pulled down the Re
Mumbai : The Indian rupee on Wednesday fell to its lowest level since mid-March against the US dollar due to large-scale buying of the greenback by foreign banks and signs of foreign institutional investors booking profits on Indian bourses.
The rupee plunged by 65 paise or 1.07 per cent, the biggest single-day drop since the 73 paise plunge on January 24, 2014 to end at 61.49 against the greenback. The Sensex ended nearly 1 percent lower, while gold rose nearly Rs.110 to Rs.28,500 per 10 grams, ahead of the spurt in demand seen during the festive season.
With foreign institutional investors turning net sellers in Indian equities and debt markets, banks were buying dollars on their behalf for repatriation, which further weakened the Indian currency. Analysts said that huge outflow of foreign money in equities markets and sale of American currency by banks and exporters weakened the Indian currency position.
Besides, a global sell-off in equities hit Indian stocks dragging the rupee. Dollar demand from importers on fears of rise in global oil prices amid worries that the Ukraine crisis could escalate, also impacted the rupee, they said. As reports filtered in that Russia is building up troops on Ukraine border despite sanctions by US and Europe, emerging currencies and stocks were hit. Importers and some banks bought dollars buying on hopes of further rise in this safe haven unit while forex dealers rushed to cover their short dollar positions, leading to deep losses for the rupee.
“Today’s movement is impacted by international economic and geo-political situation,” Anindya Banerjee, currency analyst, Kotak Securities, told IANS. “Going forward US fed decision on interest rates and stimulus easing have to seen to know the impact it have on the emerging markets, especially India.”
Continued strength in US economy lifted the American dollar after data on Tuesday showed US services sector activity hit an 8-1/2 year high last month and June factory orders surged. This affected the rupee sentiment, say dealers.
Data with the National Securities Depository Limited (NSDL) showed that foreign funds were net sellers on Tuesday in the markets to the tune of $112.91 million, or Rs.688.97 crore. During August, foreign funds have pulled out nearly $1 billion.
Some of the major currencies in Asia were also down, notably the South Korean won, the Malaysian ringgit, Indonesian rupiah and the Philippine peso. The Japanese yen and Thai baht, however, were marginally up.
Sensex slumps amid global sell-off
Domestic benchmarks dropped for the first time in three days with the Sensex slumping 243 points and the Nifty slipping over 74 points as investors booked profits in banking and metal stocks, amid weak global cues due to persisting geopolitical tensions.
The BSE 30-share Sensex resumed slightly lower and gradually moved down further to settle at 25,665.27, a fall of 242.74 points or 0.94 per cent. In previous two days, it had flared up by 427.17 points or 1.68 per cent.
The NSE Nifty also dipped 74.50 points, or 0.96 per cent, to 7,672.05 after gaining 144 points in the last two sessions. Almost all the major Asian stock markets fell with indices in Japan and Jakarta the worst-hit. European indices were last trading deep in the red, down upto 1.5 per cent.