Rupee slumped to fresh record low, Euro lower vs. Dollar

Tuesday,   09-Oct-2018   05:28 PM (IST)

The Indian rupee continued its downtrend and slumped to a fresh lifetime low of 74.40/41 levels today and ended the session at 74.39/40 levels tracking a rebound in oil prices and as comments from a government official sparked concerns over fiscal deficit. However, further losses were limited on persistent suspected interventions by the central bank. Meanwhile, weak global cues continue to exert pressure on emerging market currencies. Rupee opened higher today 73.87/88 levels tracking gains in most Asian currencies amid a rebound in the Chinese Yuan. The benchmark Brent crude oil contract was trading at $84.65 per barrel, snapping a three-session loss, amid reports of decline in crude exports from Iran, one of the major oil exporters, ahead of U.S. sanctions that will kick in on Nov. 4. Prime Minister Office has called a meeting with top officials of finance and trade ministry today, likely to discuss US sanctions on Iran and its impact on India. Indian shares ended lower today at their lowest closing level since April, with market heavyweight Tata Motors Ltd dragging down the indexes amid weak global cues. The benchmark BSE Sensex closed down 0.51 percent at 34,299.47. The broader NSE Nifty ended 0.45 percent lower at 10,301.05. Indian government bonds fell for the first time in three days, tracking rupee’s plunge. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 4.85%, 4.50% and 4.34% respectively.

The euro languished near a seven-week low on Tuesday as concerns about a row in the European Union over Italy's budget persisted. The euro has tended not to budge in response to spikes in Italian bond yields triggered by developments in the dispute, with investors judging that Rome's spending plans will not impact the monetary policy of the European Central Bank. But the threat of a showdown along with weakness in stock markets worldwide has seen traders who had bet on a fourth quarter euro rebound ditch the single currency. Italian government bond yields meanwhile edged down from 4-1/2-year highs on hopes that Economy Minister Giovanni Tria will strike a moderate tone when defending the government's budget in parliament. Italy's Deputy Prime Minister on Monday denounced European Commission President Jean-Claude Juncker and Economics Commissioner Pierre Moscovici as enemies of Europe. Ten-year Treasury yields resumed their steep climb to seven-year highs on Tuesday. That helped the dollar strengthen across the board with only Japan's yen outperforming among the major currencies. Against a basket of its rivals, the greenback rose to 96.12. The Chinese offshore yuan was slightly stronger on the day at 6.9160 yuan per dollar. It recovered somewhat after slipping about 0.35 percent overnight. At the weekend, China's central bank moved to inject more liquidity into the financial system as policymakers worried about the economic impact of a heated trade row with the United States.