While the U.S. dollar became stronger against major currencies of the world, the rupee depreciated further against it on Tuesday as the demand for dollar has gone up in the foreign exchange market from oil companies as well as foreign institutional investors (FIIs).
The rupee closed at 63.71 a dollar against 63.24 on Monday. It touched an intra-day low of 63.84.
Meanwhile, the S&P BSE Sensex dropped by 209.05 points to close at 20281.91.
On the National Stock Exchange NSE), a broader 50-share Nifty closed at 6018.05, with a loss of 60.75 points .
“Markets came off for the sixth consecutive day and have eroded 5 per cent in value over this period of time. Continuing concerns over the U.S. Fed taper, rupee depreciation, high bond yields and expectations of a sustained high consumer price index (CPI) inflation number were the reasons for the fall. FII purchases in the cash market have tapered over the past few sessions,” said Dipen Shah, Head of Private Client Group Research, Kotak Securities. Going ahead, he said, economic data in the U.S. and India would be in focus as the Reserve Bank of India (RBI) and U.S. Federal Reserve meet next month for their respective policy meetings.
Although there was a government shutdown, the U.S. posted better than expected job numbers.
“There is fear in the market that this could translate to a stronger U.S. economy which would hasten the quantitative easing (QE) taper”, said Shrinivas Viswanath, Cofounder RKSV, a leading broking firm, adding, “India is better adapted to handle any sort of taper this time but the market is gaining confidence in the U.S. over emerging economies.”
Continuing concerns over tapering of QE
and high bond
yields are the reasons for the fall