Rupee ended at record low, Euro slumps vs. Dollar

Tuesday,   05-Jul-2022   04:11 PM (IST)

The Indian rupee weakened to touch a fresh record low of 79.3750/3850 levels against the U.S. dollar as concerns of a wider current account deficit came to the forefront after the country's June trade deficit hit a record high. Rupee ended the session weaker at record low of 79.37/38 levels compared to its opening at 79.00/01 levels after touching the low of 79.3750/3850 levels on dollar’s strength, gaining support from a strong rebound in the U.S. 10-year Treasury yields. Rupee traded in the range of 79.00-79.3750 levels today. Data late on Monday showed India's June trade deficit widened to a record $25.63 billion, pushed by a rise in crude oil and coal imports, from $9.61 billion a year ago. Rupee is also weighed down by persistent foreign funds outflows. Indian bond yields were flat today. Equity market erased gains and ended lower on Tuesday after US stock futures suggested weaker opening for Wall Street later tonight. The S&P BSE Sensex zoomed 631 points during the day, but settled 100 points, or 0.19 per cent, lower at 53,134. The Nifty50, too, hit a high of 16,026 intra-day, before closing at 15,811, down 25 points or 0.15 per cent. In the forward segment 1mth, 3mth and 6mth annualized premia ended the day at 2.97%, 2.85% and 2.77% respectively.

The euro slumped to a two-decade low on Tuesday as the latest surge in European gas prices added to worries about a recession, while there was no stopping the dollar as U.S. Treasury yields staged a rebound. Swathes of currencies were under pressure. The euro's 0.8% early drop took it to its weakest since the end of 2002, Japan's yen was near 24-year lows again, while Norway's crown slumped 1% as its gas workers went on strike. Concerns about how the European Central Bank will react were also gnawing at sentiment after German Bundesbank chief Joachim Nagel had hit out at the ECB's plans to try and shield highly indebted countries from sharp rises in borrowing rates. Even the Australian dollar failed to gain traction despite the country's first back-to-back 50 basis point interest rate hike in recent memory overnight, which also cemented the fastest run up in rates there since 1994. Sterling fell on Tuesday against a strengthening U.S. dollar but jumped against the euro in July thinned trade with markets watching for any sign from the Bank of England on its monetary policy path.