Weak start! Rupee opens at 66.13/$

Indian rupee lost ground, with values moving again above 66 levels against the greenback. Burgeoning strength in US dollar against the basket of major currencies is taking a toll on the emerging markets.

The Indian rupee opened lower by 11 paise at 66.13/$ in early trade on Wednesday. Indian rupee lost ground, with values moving again above 66 levels against the greenback. Burgeoning strength in US dollar against the basket of major currencies is taking a toll on the emerging markets. In addition, Indian rupee was also weighed down by subdued export numbers. In this respect, Indian exports during October contracted 17.5% on yoy basis.

On the global front, US dollar index is racing towards 100 levels, with weakness intensifying particularly in Euro. US dollar is maintaining strength notwithstanding dull macroeconomic numbers. In this respect, US industrial production during October contracted 0.2% on mom basis. It seems markets are convinced about US Federal Reserve hiking interest rates in December, with Federal forward rates curve suggesting 70% probability of 25 basis points move on the rates. Effectively, a contrasting picture seems to be emerging on both sides of the Atlantic, wherein Fed is talking about a rate hike and ECB is contemplating at a prolonged accommodative stance. Markets to an extent may have factored in the probability of US hiking rates in December; however the moot point is whether Fed will adopt a long pause after the first move on the rates.

The currency touched a high and low of 66.20 and 66.27 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 65.98 and for Euro stood at 70.34 on November 17, 2015. While, the RBI’s reference rate for the Yen stood at 53.48, the reference rate for the Great Britain Pound (GBP) stood at 100.1056.