Rupee hits 70 a dollar for the first time

Rupee hits 70 a dollar for the first time

Mumbai: The Indian rupee on Tuesday erased all the morning gains and crossed past the psychological 70-mark against the US dollar for the first time as the contagion from the economic crisis in Turkey remained relatively contained in developed markets overnight. At 10.34am, the rupee was trading at 70.08 a dollar, down 0.21%, from its previous close of 68.93. The home currency opened at 69.84 and touched a high of 69.75 and a low of 70.08 a dollar. Bond prices also erased most of the gains and traded little changed. The 10-year bond yield stood at 7.82%, from its previous close of 7.823%. Bond yields and prices move in opposite directions.

“Emerging markets were shaken by the huge depreciation in the Turkish Lira and the jitters were felt across asset classes particularly the currency. Bond markets, taking cues from the depreciating Rupee, weakened significantly”, said Edelweiss Finance in a note to its investors.

Earlier in the opening trade the currency and bond prices gained after consumer price inflation slowed to nine month low, providing comfort to the government and Reserve Bank of India. Retail inflation dropped to a nine month low of 4.17% in July from 4.92% a month ago on the back of softening food prices and a favourable base. Core inflation eased to 6.1% from 6.4% a month ago.

Benchmark Sensex Index rose 0.2% or 75.24 points to 37,720.14. Since January, it has gained 11.2%.

So far this year, the rupee has weakened 8.3%, while foreign investors have sold $6.8 million and $5.15 billion in equity and debt markets, respectively.

Asian currencies were trading mixed. The economic troubles in Turkey have gripped global financial markets, with investors scrambling to determine whether and how far pain there would spread. President Donald Trump’s top national security aide warned Turkey’s ambassador on Monday that the U.S. has nothing further to negotiate until a detained American pastor is freed.

Philippines peso was down 0.32%, Indonesian rupiah 0.08%, Japanese yen 0.07%, Malaysian ringgit 0.06%. However, South Korean won was up 0.15%, Thai Baht 0.1%, Taiwan dollar 0.07%, China renminbi 0.05%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 96.294, down 0.1% from its previous close of 96.391.

source: livemint