Rupee Plunges 31 Paise To Nearly 1-Month Low On Trade Worries (Photo Credit: file photo)
The rupee on Tuesday dived 31 paise to end at a nearly one-month low against the US currency due to heavy dollar buying amid fresh concerns over the progress of China-US trade talks.
Crude oil prices dropping more than half a per cent and gains in the equity markets, however, helped the local unit contain losses.
The rupee closed at 71.54 to the dollar, down by 31 paise or 0.44 per cent—the biggest one day loss in this month. This is the lowest closing level since September 17 when the rupee had closed at 71.78 to the dollar.
Investor caution returned as reports suggested that China wanted more talks this month before agreeing to a deal with the US for settling trade issues. Chinese yuan also pared gains on fading hopes of a ‘phase one’ agreement between the two major economies as pitched by US President Donald Trump.
The US dollar also advanced against the major global currencies with the dollar index gaining 0.07 per cent to 98.52 despite a surge in British pound.
The British pound rose around 0.7 per cent to near levels not seen since July after the EU’s top Brexit negotiator opined that a divorce deal could be possible this week.
Crude oil prices retreated for a second day after weak Chinese trade data and fresh concerns over the Sino-US trade talks.
Global benchmark Brent crude dropped more than 0.50 per cent to USD 58.99 per barrel.
Indian stocks also advanced for the third session in a row on hopes of consumer demand revival in the upcoming festive season.
Sensex gained 291.62 points or 0.76 per cent to end at 38,506.09 -- a two-week high for the index. Nifty rose by 87 points or 0.77 per cent to settle at 11,428.30.
Meanwhile, yields on the benchmark 10-year government security spurted to 6.6668 per cent against 6.48 per cent in the previous day as retail inflation spiked in September.
Retail inflation rose to a 14-month high of 3.99 per cent in September, inching closer to the RBI’s comfort level of 4 per cent.
The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.0188 and for rupee/euro at 78.2925. The rate for rupee/British pound was fixed at 89.2891 and for rupee/100 Japanese yen at 65.61.