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Rupee slumps to 1-month low on increased dollar demand

14 Jan 2019 Evaluate

Indian rupee further weakened to nearly one month low against the US dollar on Monday, on increased demand for the American currency from importers and banks. Sentiments remained dampened after India’s industrial output hit a 17-month low of 0.5 per cent in November as compared to 8.1 per cent in October mainly on the back of contraction in manufacturing sector, mining, capital goods and consumer durable goods. Traders failed to get relief with data showing that Inflation based on wholesale prices fell to 8-month low of 3.80 percent in December, 2018, on softening prices of fuel and some food items. Besides, the weak trade in the local equity market hit the sentiment of the domestic currency. On the global front, dollar edged lower, as investors expect the Fed to halt its monetary tightening policy after Chairman Jerome Powell last week reiterated that the central bank has the ability to be patient on monetary policy given that inflation remains stable.

Finally, the rupee ended at 70.92, 43 paise weaker from its previous close of 70.49 on Friday. The currency touched a high and low of 70.95 and 70.44 respectively. The reference rate for the dollar stood at 70.82 and for Euro stood at 81.24 on January 14, 2019. While the reference rate for the Yen stood at 65.50, the reference rate for the Great Britain Pound (GBP) stood at 90.96.

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