Rupee Weakens Sharply To 79.66 Per Dollar, Falling Back Towards Record Lows

Rupee weakens to beyond 79.65 per dollar

The rupee weakened sharply on Monday as the dollar extended gains from Friday after solid US jobs data lifted expectations for more aggressive Federal Reserve policy tightening.

Bloomberg quoted the rupee at 79.6550 per dollar, a loss of about 42 paise from Friday’s close of 79.2413. 

PTI reported that the rupee fell falls 40 paise to provisionally close at 79.64 against the US dollar. 

At the interbank foreign exchange market, the domestic currency opened weak at 79.50 per dollar. It oscillated between a high of 79.45 and a low of 79.65 during the session. It finally settled at 79.64, down 40 paise over its previous close of 79.24, according to PTI.

Reuters reported that the rupee closed down 0.54 per cent to 79.66 per dollar, after a short-lived bump on Friday that saw the currency rise following a 50 basis point rate hike from the Reserve Bank of India.

“Rupee through today’s session was consistently under pressure. Initially, due to dollar short covering by speculators and later on account of importers,” a trader at a Mumbai-based private sector bank, told Reuters. “There was an overall reluctance to take an added day’s risk.”

Blockbuster US jobs growth pushed markets to move in quickly and price around a 70 per cent chance the Federal Reserve would lift rates by 75 basis points in September, sending two-year yields up 20 basis points on Friday and further inverting the curve.

That risk haunted world equity markets.

But Indian stocks defied that global trend and gained on Monday on robust capital inflows and the cooling in oil prices to below $95 per barrel.  

Indian financial markets will be shut on Tuesday.

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