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Rupee breaches 68/$ mark, hits 16-month low against dollar

15 May 2018 Evaluate

Stretching slide for the fifth straight session, Indian rupee breached the psychological 68/dollar mark to hit its lowest in sixteenth month on Tuesday, on the back of consistent demand for the greenback from state-run banks and importers. The sentiments remained under pressure with a private report stating that the Reserve Bank of India is expected to begin its rate hike cycle from December quarter, and may go for three rate hikes by 2019 taking the key policy rate to 6.75%. Adding to the pessimism, India’s Retail inflation, measured by the consumer price index (CPI) rose to 4.58% in April 2018 as compared to 4.28% in March 2018, while rural inflation increased to 4.67% and urban inflation surged to 4.42% in April 2018. Besides, the greenback’s gains against major global currencies too weighed on the domestic unit. On the global front, euro remained stuck near 4-month lows on Tuesday after weaker-than-expected economic growth out of Germany and a rise in US Treasury yields helped the dollar recover following a pause in its rally.

Finally, the rupee ended at 68.10, 59 paise weaker from its previous close of 67.51 on Monday. The currency touched a high and low of 68.13 and 67.45 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 67.52 and for Euro stood at 80.52 on May 15, 2018. While the RBI’s reference rate for the Yen stood at 61.44, the reference rate for the Great Britain Pound (GBP) stood at 91.48. The reference rates are based on 12 noon rates of a few select banks in Mumbai.

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