Rupee Weakens By 22 Paise To End At 73.62 Against Dollar Ahead Of GDP Data.

The rupee is considered a basic monetary unit in India which is equal to 100 paise. The dollar is considered the basic monetary unit in the US, Canada, and other Pacific countries. Gross Domestic Product, abbreviated as GDP, is the total value of goods and services produced in a country. GDP in economics- GDP is measured over specific time frames, such as a quarter or a year. The rupee ended sharply lower against the US dollar today because a decline in the euro lifted the greenback globally. The fact that the dollar index neared the psychologically crucial level of 97.00 also provided some definitive cues to market participants in determining the rupee’s trajectory, dealers said.

Trends in the currency market are seen as the rupee weakened by 22 paise - or 0.30 percent - to end at 73.62 against the US dollar on Monday ( 31st August 2020 ), as analysts awaited official data on the country's GDP to assess the damage caused by the coronavirus pandemic.

After beginning the day mildly stronger at 73.23 in comparison with its earlier shut of 73.40, the rupee reversed course and traded inside a variety of 73.23-73.69 in the course of the four-hour session.

Ongoing border tensions between India and China have intensified and the USDINR spot has been observed with strong buying pressure. All of this while risk sentiment was bullish, however, going forward geopolitical tensions will keep any decline in the USD-INR spot under control. The 74 level is crucial resistance and constant trading above that will trigger a bullish move, while 73 will act as strong support. 

According to a poll by the Reuters news agency, the Indian economy contracted 20% in the first quarter of the current fiscal year – its worst performance in decades. Lack of dollar sales and purchases of the greenback for importers were also said to have accelerated the rupee’s decline. Currency dealers said there was moderate demand from oil importers as they are uncertain about the commodity’s price once US sanctions on Iran kick in on Nov 4. However, these dollar purchases were not aggressive, owing to a sharp fall in crude oil prices on Monday, dealers said. The rupee opened lower, with a gap of 10 paise today, because the appetite for riskier assets was dampened following media reports that the US is preparing to impose fresh tariffs on imports worth $267 bln from China, dealers said. Immediately after open, purchases of the greenback by two major state-owned banks and a UK-based bank dragged the rupee down to 73.61 a dollar within nine minutes of trade.

    However, sales of dollars by two major private banks prevented the rupee from falling further and pushed it back to 73.56 a dollar. An overnight fall in crude oil prices also supported sentiment for the Indian unit. Premiums on dollar/rupee forwards rose because some importers and banks purchased the greenback for forwarding delivery, noting the rupee’s fall in the spot market, dealers said. However, it is still down 3.17 percent against the dollar so far this year