Karnataka elections twist, Rupee in freefall, trades over 68-mark against dollar

The Indian rupee once again breached 68-price level against US benchmark dollar index at interbank forex market on Monday. In early opening, the domestic unit pared some initial losses, to trade lower by 7 paise at 68.07 against the American unit on sustained dollar demand from importers and banks, despite lower local equities. The rupee’s reaction against dollar came in after Karnataka election’s dramatic twist turned into a political battle which played a spoilsport and dragged down the markets. 

At around 1226 hours, Indian rupee was trading at 68.115 down by 0.130 points or 0.19% against US dollar. 

According to India Rating, depreciating rupee, if unhedged, will impact investor returns in solar power projects in the event of a significant exchange rate variation between the time of bidding (bid assumptions) and finalisation of module supply agreement. the exchange rate deteriorated 5% yoy in May 2018, when the bids were hovering around Rs 2.5 per unit.

Analysts at Kotak Securities said, “On a relative strength, USDINR remains an underperformer in the EM basket. Intermediate trend remains upward. Therefore, the path of least resistance is on the way up.”

The rupee on Friday closed at 67.985 down by 0.01% against US dollar index, as per investing.com data. Further foreign investors continued to remove their money from Indian market, as they recorded an outflow of Rs 695.97 crore cumulatively in equity, debt and hybrid market on the same day. 

Meanwhile on Monday, the benchmark Sensex was trading at 34,681.55 down by 166.75 points or 0.48%, whereas Nifty 50 was trading at 10,533 below 63.30 points or 0.60%.