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Rupee extends weakness for the second day as China devalues Yuan

07 Jan 2016 Evaluate

Indian rupee extending weakness for the second day declined on Thursday, after the Chinese central bank, PBoC, devalued yuan by 0.51 per cent and set it midpoint to its weakest level since March 2011, sending Asian currencies tumbling. Besides, sustained foreign fund outflows amid increased demand for the US currency from importers and sharp decline in the local equity markets, also weighed on the rupee sentiments. Investors failed to draw any solace with World Bank’s report that India would remain by far the fastest growing large economy in 2016 even as it scaled down its global growth forecast to 2.9% against its June forecast of 3.3% growth because of sluggish performance from major emerging market economies. On the global front, yen rose to its highest against the dollar in more than four months as investors looked for a haven after China guided the yuan aggressively lower.

Finally, the rupee ended at 66.93, 10 paise weaker from its previous close of 66.83 on Wednesday. The currency touched a high and low of 66.97 and 66.67 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 66.91 and for Euro stood at 72.37 on January 07, 2016. While, the RBI’s reference rate for the Yen stood at 56.78 the reference rate for the Great Britain Pound (GBP) stood at 97.8514. The reference rates are based on 12 noon rates of a few select banks in Mumbai. 

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