Mumbai: Edging closer to its six-month low, the Indian rupee fell the 71-mark against USD, amidst geopolitical tension in Hong Kong and US-China trade spat.
Fears of Argentina’s credit default and daily yuan fixing, besides fears of devaluation by China are factors pushing down the Indian rupee.
After closing at 70.79 a dollar on Friday, the rupee opened at 71.6 on Tuesday and so far has touched a high of 71.13 and a low of 71.18 per dollar, a level last seen on February 28.
Markets were closed in India on Monday on account of Eid.
Except Thailand’s Baht and Philippines peso, other Asian currencies like South Korean won and Japanese yen, were trading low.
Baht and peso were trading higher by 0.22 per cent and 0.1 per cent, respectively.
In the atmosphere of geopolitical tensions and trade spats, investors place trust on US dollar, which is considered a safe bet. As a result, the valuation of dollar pushes up and other currencies tumble down.
The dollar index was at 97.57, up by 0.19 percent from its previous close of 97.38.
Apart from global factors, the Indian markets are awaiting data on consumer price index-based inflation (CPI) which will be released in the evening.
IMPACT OF WEAKENING RUPEE
A weakening rupee heavily impacts dollar borrowings of Indian companies, as it inflates their repayments.
The depreciating currency also impacts companies’ balance sheet than its revenue because of the dollar borrowings, a ratings agency said.
The depreciating rupee also presents fresh challenges to Indian policymakers in terms inflation, which potentially lends voice to policy rate cuts.