This was on the back of strong demand for the greenback from importers amidst rising global crude prices and persistent capital outflows.
Further, Nifty opened below the 10,700 mark as the rupee extended its decline. The dollar climbed to an 11-month high on Thursday after strong US economic data drove Treasury yields to their highest since mid-2011. Asian stocks also were pressured as borrowing costs rose.
After crashing below the 73 mark against the dollar on Wednesday, the Indian rupee plunged to a new low of 73.73 during opening trade. This was on the back of strong demand for the greenback from importers amidst rising global crude prices and persistent capital outflows.
The widening current account deficit has further lowered the appeal of local assets for overseas investors. The rupee has the dubious distinction of being the worst performing currency in Asia, declining 13% this year. As the dollar has strengthened, capital outflow from emerging markets has increased, causing their currencies to depreciate.
Incidentally, the central bank eased norms for state-run refiners such as Indian Oil Corp., Bharat Petroleum Corp., and Hindustan Petroleum Corp. for overseas borrowing under the so-called automatic route. It removed the $750mn cap, but has kept the overall limit of $10bn. What’s more, it has also let go of the compulsory hedging requirements on borrowing.
Meantime, all eyes are now on the RBI monetary policy meeting. Rumors suggest that the repo rate may be hiked by 25bps. India’s top bank may also consider changing its monetary policy stance. Investors are keenly looking out for whether the RBI announces any crucial measures to support the rupee. The apex bank is worried that a sharp rise in crude oil prices and a declining rupee will push inflation higher in the coming months.
The widening current account deficit has further lowered the appeal of local assets for overseas investors. The rupee has the dubious distinction of being the worst performing currency in Asia, declining 13% this year. As the dollar has strengthened, capital outflow from emerging markets has increased, causing their currencies to depreciate.
Incidentally, the central bank eased norms for state-run refiners such as Indian Oil Corp., Bharat Petroleum Corp., and Hindustan Petroleum Corp. for overseas borrowing under the so-called automatic route. It removed the $750mn cap, but has kept the overall limit of $10bn. What’s more, it has also let go of the compulsory hedging requirements on borrowing.
Meantime, all eyes are now on the RBI monetary policy meeting. Rumors suggest that the repo rate may be hiked by 25bps. India’s top bank may also consider changing its monetary policy stance. Investors are keenly looking out for whether the RBI announces any crucial measures to support the rupee. The apex bank is worried that a sharp rise in crude oil prices and a declining rupee will push inflation higher in the coming months.
Further, Nifty opened below the 10,700 mark as the rupee extended its decline. The dollar climbed to an 11-month high on Thursday after strong US economic data drove Treasury yields to their highest since mid-2011. Asian stocks also were pressured as borrowing costs rose.
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