Rupee weakens on global cues, fall in EM currencies

Global cues rather than domestic factors got the better of the Indian rupee on Thursday, on the day the trend of the Lok Sabha election results indicated an overwhelming victory for the ruling NDA.

Negative global cues, such as a rise in protectionist measures along with fall in emerging markets (EMs) currencies, dented the Indian rupee on vote counting day.

Accordingly, the rupee, on Thursday, weakened to 70.02 per US dollar from its previous close of 69.67.

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The currency had opened at 69.50 to a greenback. It ranged, thereafter, between 69.38-70.07 to a dollar.

"A sell off at the global exchanges and strengthening trend of the dollar against other emerging market currency was the main reason behind the rupee`s depreciation in the day," Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, told IANS.

Besides, market observers cited an apparent intervention from the central bank to defend the currency. 

The Reserve Bank of India (RBI) is known to intervene in the markets via intermediaries to buy or sell US dollars to keep the rupee in stable orbit.

According to Sajal Gupta, Head Forex and Rates, Edelweiss Securities: "Market had factored in the best outcome...but today (Thursday) the rupee depreciated on the back of global factors and negative Asian cues."