Investors cautious as rupee nears 73/$; indices flattened again

Rupee worst-performing currency in Asia, falls 12.14% against the dollar


Benchmark indices trade flat as rupee inches towards 73 against US dollar for the first time ever amid weak global markets.

The rupee fell another 0.13 paise at open to 72.90 per dollar after closing at Rs 72.69/dollar on Tuesday, while the yield on the benchmark government bonds rose another three basis points to 8.18 per cent.

On a year-to-date basis, the rupee is the worst-performing currency in Asia, falling 12.14 per cent against the dollar.

Sensex shed nearly 1,000 points in two days as the sell-off continued for a second day on Tuesday on fears that India’s macro fundamentals could be worsening. The widening current account deficit due to rise in oil prices, weakening rupee, and expensive valuations saw foreign portfolio investors (FPIs) pull back from domestic equities.

Among macro data pointers, July industrial production and August CPI inflation will be announced later in the day today. Industrial production rose to a five-month high of 7 per cent in June while CPI inflation fell to 4.17 per cent in July, lowest in nine months, driven by cheaper food items.

Globally, Asian stocks were pinned near 14-month lows on Wednesday, as investor confidence was chilled by the latest round of verbal threats in an intensifying US-China trade conflict.

MSCI’s broadest index of Asia-Pacific shares outside Japan lost 0.05 per cent, hovering near its lowest levels plumbed since July 2017 on Monday.

Tokyo’s Nikkei fell 0.25 per cent and Australian stocks gave up 0.3 per cent, while South Korea’s KOSPI managed to eke out a modest 0.15 per cent gain.

The mood was dimmed by the verbal sparring between Washington and Beijing as the months-long escalation in trade tensions between the world’s two biggest economies took their toll on riskier assets.

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