The Indian rupee weakened further to touch a fresh record low against the U.S. dollar in afternoon trade on Tuesday as concerns of a wider current account deficit resurfaced the country’s June trade deficit hit a record high. Data released late on Monday showed India’s June trade deficit widened to a record $25.63 billion, pushed by a rise in crude oil and coal imports, from $9.61 billion a year ago. Rupee was trading at around 79.13 against the greenback, after hitting a fresh lifetime low of 79.17. It had touched the previous record low of 79.12 last week and had rebounded a little when it closed at 78.95 on Monday.
Rupee to remain volatile this week, support in 79.55-79.80 range
The local unit has plunged 6 per cent against the US dollar this year, weighed down by broad strength in the greenback and as investors retreated from domestic share markets. “Hawkish stance of the global central banks has been pressuring emerging market currencies. However, improved performance of the service sector and upbeat collection of goods and service tax supported the rupee. The rupee also got support after the government of India increased import duty on gold by 5% on Friday to curb imports of gold and handle trade deficits. We expect the rupee to remain volatile this week and could find support in the range of 79.55-79.80,” said Rahul Kalantri, VP Commodities, Mehta Equities.
Sentiments bearish for Rupee amid dollar demand, resistance in 79.15-79.30 range
“The sentiments remain bearish for the rupee amid dollar demand from oil importers while exporters may not be in hurry to sell the dollar which is a classic case of the demand-supply imbalance. The strength in the dollar index and higher crude oil prices also weigh on the rupee along with weaker macro data. Technically, USDINR is having resistance in the area of 79.15 to 79.30 and support at 78.80,” according to Dilip Parmar, Research Analyst, HDFC Securities.
Indian equity markets erase majority intraday gains
Meanwhile, in domestic equity markets, the key benchmark indices had pared gains in the second half of the trading sessions owing to profit-taking in ITC and auto stocks. The BSE Sensex, which, touched a high of 53,866, was up 300 points at 53,500. The NSE Nifty had crossed the 16,000-mark for the first time in nearly a month in intraday trades on Tuesday. In the broader markets, the BSE MidCap and SmallCap indices also pared gains. The overall breadth, however, remained favourable.