Oct 04 2018

Rupee ends at record low on oil surging, higher U.S. yields

Financial Market Overview

4th October, 2018

Evening Coffee

Rupee:-

  • Indian rupee plunged to a record low for a second day against the dollar, as jump in crude oil prices and elevated U.S. yields heighted fear over widening current account deficit and further outflows from local markets. The rupee posted its third consecutive loss, closing at a record-low 73.58 to a dollar, against 73.34 yesterday. It had slumped to 73.82 intraday but managed to pare some losses on likely intervention from the central bank.
  • The Nikkei/IHS Markit Services Purchasing Managers’ Index fell to 50.9 last month from 51.5 in August, and held just above the 50 mark that separates growth.

Indian Equities:-

  • Indian shares plunged over 2 percent on Thursday, dragged by energy stocks such as Reliance Industries and oil marketers, while the rupee hit an all-time low. Oil marketing companies slumped after the government cut petrol and diesel prices by 2.5 rupees per litre and said these companies will absorb 1 rupee per litre.
  • The benchmark BSE index closed down 2.24 percent at 35,169.16, while the broader NSE index ended 2.39 percent lower at 10,599.25, in its biggest percentage fall since Nov. 11, 2016.

Global Markets:-

  • European markets are mixed today. The France CAC 40 is down 0.90%, the London’s FTSE 100 is off 0.89%, the SMI fell 0.66%, the Eurozone’s STOXX50 is lower by 0.35% while the Germany DAX and Spain’s IBEX35 gains 0.06% and 0.02% respectively.
  • The Brent crude oil price was last trading at $86.17 per barrel. It rose 1.8% yesterday to as much as $86.74, highest since end-October 2014 and was on course for their sixth weekly advance in the last seven. Worries over supply disruptions prompted by Washington’s impending sanctions on Iran have prompted Brent crude prices to rise almost 10% over the last one month. Rising crude prices, up nearly 29% year-to-date, have prompted analysts to revise higher India’s current account deficit estimates amid a widening trade gap.
  • Yield on the benchmark 10-year U.S. Treasury jumped more than 10 basis points yesterday and the dollar index advanced for the sixth straight session following better-than-expected U.S. services and private employment data.