Days after its biggest fall since September 2013 on the back of US-China trade war along with domestic political factors, the Indian rupee weakened for the fourth consecutive day against the US dollar. This comes ahead of the RBI’s policy review.
On Wednesday, the rupee opened at 70.98 against the US dollar, which is 15 paise down. In the past four sessions, the rupee has lost 202 paise. This year, the currency has declined 1.3%.
On Tuesday, the Indian rupee weakened to 70.82 per US dollar from its previous close of 70.7350.
Global cues, such as a rise in protectionist measures along with a massive fall in the Chinese yuan and other emerging markets (EMs) currencies, kept the Indian rupee subdued. China’s central bank set its daily fixing near 7 a dollar, causing currencies to trade lower. In other global markets, after Reserve Bank of New Zealand cut its benchmark interest rate by 50 basis points, its dollar plunged more than 1% as the interest rate cut was higher than expected.
Other currencies that were trading low were the Philippines peso (down 0.47%), Singapore dollar (down 0.15%), Thai Baht, which declined by 0.12%, Malaysian ringgit, which was down 0.11%, and Indonesian rupiah which fell by 0.1%.
Additionally, political tensions after the Central government decided to abrogate Article 370 which provided special status to Jammu and Kashmir and bifurcate the state, further spooked foreign investors who sold over Rs 2,000 crore worth of equities.
However, all eyes are now on the RBI policy, set to be announced on Wednesday. The expectation is that the RBI will cut the repo rate by 25 basis points, making it the fourth cut since December last year.
The low inflation, economic slowdown and geopolitical tensions are factors that will be factored in by the monetary policy committee.
With IANS inputs