Beijing devalues yuan again; Sensex, rupee post losses
Rupee stood at 66.74 and Sensex is trading at 25,012.18 on Tuesday
Mumbai: The Indian rupee plunged sharply on Wednesday to hit its lowest level since September 2013 amidst sharp fall in emerging market currencies after China allowed the yuan to fall for the second straight day. The Chinese currency fell 1.6 per cent on Wednesday after dropping two per cent the previous day, which triggered panic in global markets fuelling fears about a currency war. The Indian rupee opened down with a huge gap and hit an intra-day low of 64.93 against the dollar before closing the day at 64.78 per dollar.
“The rupee had enjoyed good support at 64.30 per dollar. However, when the Indian rupee opened the day down at 64.55, there was panic buying of dollars from importers. This triggered further fall in the rupee sending it close to 65 per dollar in the intra trade,” said Hemal Doshi, chief currency strategist at Geofin Comtrade.
According to currency dealers, rupee recovered from its day’s low following brief intervention by the RBI, which sold dollars when the local currency breached 64.80 level mark against the dollar.
Looking at the retail inflation data and IIP numbers that were released later in the day, Mr Doshi said that the rupee could see some bounce back in the near term. The immediate trigger for the sharp weakness in rupee is on account of the devaluation of Chinese yuan that had put pressure on the entire emerging market currencies. Additionally, the fear of a rate hike by the US Federal Reserve in September is also having an adverse impact on the rupee at the moment,” said Hariprasad M.P. of Centrum Broking.
( Source : deccan chronicle )
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