The rupee continues to fall against the US dollar on Thursday, opening at a fresh low of Rs 70.68 against US dollar. In the morning session, the rupee opened 18 paise or 0.27 per cent lower against the previous day close of Rs 70.77 against the US dollar. Also Read - Rupee Hits New Low of 74.45 Against Dollar; Sensex Crashes Over 1,000 Points on Global Sell-off
There are many factors responsible for weakening rupee ranging from high crude oil prices resulting in widening of current account deficit (CAD). Current account deficit is the difference between imports and exports of the country. India imports 80 per cent of its crude oil demand which adversely affects the currency exchange rate. Also Read - Indian Rupee Crosses 73 For First Time; Opens at All-Time Low of 73.24 Against US Dollar
Forex dealers told PTI besides strong month-end demand for the American currency, buying by importers, mainly oil refiners in view of surging crude oil prices and capital outflows, weighed on the domestic currency. Also Read - Indian Rupee Falls to All Time Low of 71.37 Per Dollar
Furthermore, the dollar strength against its rival currencies overseas too put pressure on the rupee, they said.
The rupee had recorded a steep fall of 49 paise, to close at record low of 70.59 against the dollar in the previous session.
On Monday the rupee closed at 70.16 to the dollar.
Index-wise, the Nifty50 on the National Stock Exchange (NSE) opened flat at 11694.75 points, 3 points up against the previous close.
“While global trade worries continued to cast a shadow on positive investor sentiment, the selloff today can largely be attributed to traders booking profits after the recent rally,” said Abhijeet Dey, Senior Fund Manager for Equities, BNP Paribas Mutual Fund.
Geojit Financial Services Head of Research Vinod Nair said: “Market gave up some gains due to a weak rupee and profit booking ahead of F&O expiry tomorrow.”
“Government’s comment on consolidation of PSU banks led the indices to outperform while the rise in global commodity price helped metal index performance. Market sentiment remains positive amid gradual reversal in foreign inflow and improvement in broad market outlook.”
(With IANS Inputs)