Rupee sees biggest single-day drop in six years over Kashmir, US-China tensions

The Indian rupee is trading flat at 70.75 per dollar versus previous close 70.73.

It opened lower by 7 paise at 70.80 per dollar.

The rupee on August 5 crashed by 113 paise - the biggest single-day drop in the past six years - to close at a five-month low of 70.73 due to heavy capital outflows by investors anxious over the US-China trade tension, a sharp devaluation in yuan and uncertainty over Kashmir issue. This was the third straight session of fall for the rupee, during which it lost a massive 194 paise.

Rahul Gupta, Currency Research Head, Emkay Global Financial Services said, "The global trade turmoil between US-China and political imbalance in Kashmir led USD/INR spot open at 11-week high. Over the day, USD/INR violated the major resistance of 70.20 from its 200 SMA."

"If the pair closes above 70.20 then the view will continue to be bullish and we can see 71.30 before the month end. While, on the downside 69.85 will continue to act as a strong support. Meanwhile, this week is the RBI policy. Widely, RBI is expected to cut rates further by 25bps and continue to hold the accommodative stance which will weigh on rupee," he added.

The dollar-rupee August contract on the NSE was at 70.85 in the previous session. Open interest increased 35.88% in the previous session, said ICICIdirect.

We expect the USD-INR to find support at lower levels. Utilise downsides in the pair to initiate long positions, it added.

Original Source: https://www.moneycontrol.com/news/business/markets/rupee-trades-flat-at-70-75-per-dollar-4293981.html