Indian rupee pared all of its initial gains and turned weaker against dollar on Wednesday, due to fresh demand for the American currency from banks and importers. Traders remained cautious with Moody's Investors Service’s latest report that higher crude price is a key risk to India’s growth, but subsidy reform in petrol and diesel has diminished the risk to sovereign credit profile. Market participants overlooked private report showing that activity in India’s service industry rebounded in June from a mild contraction last month, expanding at its quickest pace in a year on the back of a surge in new business orders. The Nikkei/IHS Markit Services Purchasing Managers’ Index (PMI) climbed to 52.6 last month, its highest since June 2017, from 49.6 in May. Besides, weakening of dollar against some overseas currencies and strong gains in the local equity markets failed to cast any impact on the rupee. On the global front, euro rose against the dollar on Wednesday but the move was limited as concerns ahead of Washington's end-of-week deadline to impose tariffs on Chinese imports kept many investors on the sidelines.
Finally, the rupee ended at 68.74, 14 paise weaker from its previous close of 68.60 on Tuesday. The currency touched a high and low of 68.78 and 68.46 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 68.53 and for Euro stood at 80.02 on July 4, 2018. While the RBI’s reference rate for the Yen stood at 62.09, the reference rate for the Great Britain Pound (GBP) stood at 90.52. The reference rates are based on 12 noon rates of a few select banks in Mumbai.
