Fears increase over likely US interest rate hike.
AB Wire
The Rupee weakened past the 67 per dollar mark on Monday as investors fretted about a likely US interest rate hike in the middle of the week, reported the Mint.
The investors also fears that the government may fail to pass key bills such as the goods and services tax (GST) bill and real estate bill. The rupee closed lower for eight out of nine trading sessions.
The home currency closed at 67.10, a level last seen on 3 September 2013. It fell 0.31% at the close, its steepest single day fall since 26 November, from its previous close of 66.90. The local unit opened at 67.06 and touched an intraday low of 67.13—a level last seen on 4 September 2013. Since the beginning of this year, the rupee has lost 6.05% against the US dollar.
“If you look at the domestic equity market and how the oil prices have moved, there is no fundamental reason for the rupee to fall. This is just in anticipation of the Federal Reserve announcements. We expect the rupee to stabilize around 66.75 if the statement from the US is dovish,” said Harihar Krishnamoorthy, treasurer, First Rand Bank, according to the Mint report.
The equity benchmark Sensex rose 105.92 points, or 0.42%, to close at 25,150.35 points. The BSE index has fallen in seven of the last nine trading sessions, losing 1,134 points, or 4.4%.
Forbes reported that the Indian Rupee falling is not that much of a surprise.
Here is what Forbes contributor Tim Worstall had to write:
“The Indian press has stories today talking about how the Indian Rupee has fallen against the US dollar. And while that’s true that’s not really the point. The proper point being that the US dollar is rising against most currencies. Which, given that interest rates are likely to rise later in the week in the US, isn’t really all that much of a surprise.
“It’s only when we work such matters through that we can work out what, if anything, we might want to do as a matter of public policy. If the rupee falls because of something the Indian government is doing or not doing then, depending upon whether the Indian government wants the rupee to fall or not, perhaps they should do more or stop whatever it is that they’re doing. On the other hand, if this is just a specific example of a general event, the dollar rising against near all currencies, then obviously there’s nothing for India to do.”