Rupee hits 5-week low of 69.06, drops 27 paise against dollar amid heavy selling in domestic equities

Mumbai: The Indian rupee on Thursday dropped by 27 paise to close at a near five-week low of 69.06 against the US dollar amid strengthening of the American currency and heavy selling in domestic equities. Forex traders said though the US Federal Reserve cut the benchmark lending rate on Wednesday for the first time in more than a decade, market participants reacted to Fed Chair Jerome Powell statement which dampened hopes of a further rate cut. At the interbank foreign exchange (forex), the domestic currency opened at 69.17 a dollar and touched a high of 69.01 and a low of 69.20 during the session. The domestic currency finally settled at 69.06 a dollar, down 27 paise over its previous close – its weakest level since 27 June. [caption id=“attachment_6004721” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] “The rupee is under pressure today due to a sharp rise in the dollar index after the Federal reserve ruled out prolonged easing cycle,” Rushabh Maru, research analyst - currency and commodity, Anand Rathi Shares and Stock Brokers, said. Maru further noted that “in the short term the rupee might depreciate to 69.80 - 70 levels on account of weak momentum in the domestic equities. The focus will now shift to the RBI monetary policy.” The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.35 percent to 98.85. “Surge in dollar index resulted in the weakness in the rupee, which registered five-week low,” said V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities. Forex traders said unabated foreign fund outflows and disappointing macroeconomic data weighed on investor sentiment. The government’s fiscal deficit touched Rs 4.32 lakh crore for the June quarter, which is 61.4 percent of the budget estimate for 2019-20 fiscal. Brent crude futures, the global oil benchmark, fell 0.97 percent to $64.42 per barrel. Meanwhile, the 10-year government bond yield was at 6.42 percent on Thursday. Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 1,497.07 crore on Wednesday, provisional data showed. Equity benchmark BSE Sensex tumbled 463 points while the NSE Nifty closed below the key 11,000-mark on Thursday amid heavy selling in metal, banking and tech stocks. After a weak opening, the 30-share BSE Sensex plunged more than 750 points in late-afternoon trade, before finally ending at 37,018.32, down by 462.80 points or 1.23 percent. Similarly, the broader NSE Nifty dropped 138 points or 1.24 percent to end at 10,980.00. Meanwhile, Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 68.8569 and for rupee/euro at 76.8420. The reference rate for rupee/British pound was fixed at 83.7364 and for rupee/100 Japanese yen at 63.43.