The rupee is down more than 13% against the US dollar so far this year.
The rupee rose marginally against the US dollar on Wednesday. The rupee moved 9 paise higher to close at 72.60 against the greenback. The mild gain in the rupee against the dollar came after two days of fall. Weakness in the greenback overseas provided some support to the rupee but crude oil prices held near four-year highs capped the upside. The rupee had closed marginally lower at 72.69 against the American currency on Tuesday. The rupee is still down more than 13 per cent against the US dollar so far this year.
Here are 10 things to know:
1. Crude oil prices edged up, with the Brent trading near 82$ a barrel – near four-hear highs registered in past two sessions. Brent is the international benchmark for crude oil. High crude oil prices tend to widen the trade account deficit for India, which meets more than 80 per cent of its oil requirement through imports. (Also read: Why crude oil prices have spiked)
2. The dollar moved in a tight range against a basked of currencies, ahead of release of the outcome of the Federal Reserve’s policy meeting due later in the day.
3. “Apart from the Fed interest rate decision, investors also await talks between US President Donald Trump and Japanese Prime Minister Shinzo Abe on the sidelines of the United Nations General Assembly meeting in New York,” forex advisory firm IFA Global said in a note.
4. Analysts see elevated levels in crude oil prices impacting the current account deficit and inflationary pressures.
5. “Even though the ongoing Sino-US trade spat has weakened the dollar as is reflected in the drop in dollar index below 94 levels, we expect rupee to continue to be weak and trade between 72.50-73.20 levels,” said Salil Datar, CEO and executive director, Essel Finance VKC Forex.
6. The Cabinet gave approval to several key proposals including a new policy for the telecom sector. Telecoms Minister Manoj Sinha said the government expects to attract $100 billion in investments in the sector.
7. It also cleared a Rs 5,500-crore package for the sugar industry, that includes over two-fold jump in production assistance to cane growers and transport subsidy to mills for export up to 5 million tonnes in the marketing year 2018-19.
8. The finance ministry, and regulators RBI and Sebi, are “closely following” the credit markets and will take “appropriate actions” to avert a “market freeze”, said Sanjeev Sanyal, Principal Economic Adviser to the Ministry of Finance.
9. “On rupee, all options are open,” he added. “The US dollar seems to have stabilized against the basket, but oil and trade issues are still fluid.”
10. Domestic stock markets closed lower for a second straight session, as caution prevailed ahead of the derivatives expiry due on Thursday.
(With agency inputs)