Nifty99000 100%

Sensex99000 100%

Article rating: 4.3
Article rating: 4.1
Article rating: 4.3
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: No rating
Article rating: 4.0
Article rating: 4.0
Article rating: No rating
Article rating: 3.0


Rupee slides on Karnataka poll results, fund outflows

Author: IANS/Tuesday, May 22, 2018/Categories: Currency

Rupee slides on Karnataka poll results, fund outflows

Mumbai - The formation of a non-BJP government in Karnataka, along with a persistent outflow of foreign funds from the country's equity and debt markets and high crude oil prices further weakened the Indian rupee on Monday.

Accordingly, the Indian rupee weakened by 12 paise against the US dollar to 68.12-13 on Monday, from its previous close at 68.01 per greenback.

Last week, it had weakened by 68 paise to close at 68.01 against the US dollar from its previous close of 67.33 per greenback. 

"The US dollar continues to edge higher on the back of foreign fund outflows from the Indian bond and equity markets which is a part of larger sell-off seen in the EM market due to the rise in US interest rates," Anindya Banerjee, Deputy Vice President for Currency and Interest Rates with Kotak Securities, told IANS.

According to Banerjee, persistent outflow of foreign funds from the Indian equity and bond markets has had an adverse impact on the rupee.

On Monday, provisional data with the stock exchanges showed that foreign institutional investors sold scrips worth Rs 166.15 crore. Foreign institutional investors had sold scrips worth Rs 1,496.79 crore during the trade week ended May 18.

"The Indian rupee is also underperforming its EM peers on the account of higher crude oil prices and domestic political uncertainties. To curb the free fall in the Indian rupee's value against the US dollar, the RBI has steeped-up its US dollar selling activities," Banerjee said.

Besides fund outflows, geo-political tensions in the Middle East and supply side constraints have led to a surge in global crude oil prices. The latest Brent crude price hovered around the $80 per barrel mark.

However, the price of the Indian basket of crude oils, composed of 70 per cent sour grade Oman and Dubai crudes and the rest by sweet grade Brent, has gone upwards of $72 a barrel in May, after rising to an average of $69.30 in April 2018.

It averaged $47.56 and $56.43 per barrel respectively during the last two financial years.

On May 18, the Finance Ministry estimated that the rise in oil prices may inflate India's import bill by around $25 billion to $50 billion. The surge has already pushed the cost of petrol in the national capital to Rs 75.32 per litre.

Banerjee predicted an immediate range for Indian rupee to be between Rs 66.70 and Rs 68.30 per US dollar.

"Over the past few days, calming of trade dispute between US and China and interest rate hike expectations from the Central Bankers in the developed economies has also played its part in the weakening of the Rupee," said Deepak Jasani, Head of Retail Research at HDFC Securities. 

"The rupee is now close to its all time low of 68.91 made in Feb 2016 and we soon need reversal in the crude prices and USD value to avoid breaching that level."

Print Rate this article:
No rating

Number of views (198)/Comments (0)

rajyashree guha


Other posts by IANS
Contact author

Leave a comment

Add comment



Ask the Finapolis.

I'm not a robot
Dharmendra Satpathy
Col. Sanjeev Govila (retd)
Hum Fauji Investments
The Finapolis' expert answers your queries on investments, taxation and personal finance. Want advice? Submit your Question above
Want to Invest



The technical studies / analysis discussed here can be at odds with our fundamental views / analysis. The information and views presented in this report are prepared by Karvy Consultants Limited. The information contained herein is based on our analysis and upon sources that we consider reliable. We, however, do not vouch for the accuracy or the completeness thereof. This material is for personal information and we are not responsible for any loss incurred based upon it. The investments discussed or recommended in this report may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and using such independent advice, as they believe necessary. While acting upon any information or analysis mentioned in this report, investors may please note that neither Karvy nor Karvy Consultants nor any person connected with any associate companies of Karvy accepts any liability arising from the use of this information and views mentioned in this document. The author, directors and other employees of Karvy and its affiliates may hold long or short positions in the above mentioned companies from time to time. Every employee of Karvy and its associate companies is required to disclose his/her individual stock holdings and details of trades, if any, that they undertake. The team rendering corporate analysis and investment recommendations are restricted in purchasing/selling of shares or other securities till such a time this recommendation has either been displayed or has been forwarded to clients of Karvy. All employees are further restricted to place orders only through Karvy Consultants Ltd. This report is intended for a restricted audience and we are not soliciting any action based on it. Neither the information nor any opinion expressed herein constitutes an offer or an invitation to make an offer, to buy or sell any securities, or any options, futures or other derivatives related to such securities.

Subscribe For Free

Get the e-paper free