The Indian roupine went below 86 for an American dollar on Monday, reaching its lowest level in more than two weeks. According to trade, this depreciation is explained by a high demand for dollars from companies and by capital outlets related to equity markets, against the backdrop of uncertainties surrounding trade policies of the United States.
The Indian currency finished the session at 86,9850 for a dollar, down 0.2% compared to its fence on Friday, fixed at 85.80. Earlier in the day, the Roupie had hit an 86,0475 floor, its lowest level since June 25.
According to market operators, the demand for dollars from a large Indian conglomerate and other companies weighed on the Roupie, in addition to probable outings of Indian shares.
The main Indian stock market indices, the BSE Sensex and the NIFTY 50, fell 0.3%, while most regional places displayed an upward trend. [.BO]
In Europe, the shares are declining and the single currency was slightly weakened against the dollar, after the American president Donald Trump threatened this weekend to impose a 30% tax on imports from the region, thus intensifying the current trade war.
The term contracts on American actions were also in red, those of the S&P 500 giving up 0.3%.
“The movements are not more important, because investors consider these threats as a Washington negotiation tactic aimed at pushing the other party to conclude an agreement,” said ING in a note.
India is one of the few major business partners in the United States not yet received a customs duties notification letter. Indian negotiators are expected to return to Washington soon for a new cycle of discussion, focused on automotive components, steel and agricultural products.
“Everything well considered, the chances that the Roupie regains ground remain limited,” said Amit Pabari, managing director of the CR Forex currency consulting firm. According to him, the Roupie should meet a resistance around the levels of 85.40-85.50.
Investors are now awaiting the publication of consumer price inflation figures in India, scheduled later in the day. According to a Reuters survey carried out with 50 economists, moderation of food prices and a favorable basic effect would have enabled Indian inflation to slow down in June, falling at its lowest level for more than six years, to 2.50%.
