The Indian rupee declined to 83.95 against the US dollar in early trade on Tuesday. The drop was due to a stronger greenback in global markets and weak domestic manufacturing data. A shaky domestic equity market also contributed to the drop.
The currency has been oscillating in a tight range because of intervention by the Reserve Bank of India. The central bank’s active intervention has kept the currency within this narrow band, and as long as the RBI maintains its grip, the rupee is likely to remain stable.
At the interbank foreign exchange market, the rupee opened at 83.94, lower by 3 paise from its previous close before dropping further to 83.95.
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Meanwhile, in the domestic equity markets, Sensex declined 78.28 points to 82,481.56 in early trade, while Nifty was down 23.6 points to 25,255.10.
Brent oil prices slid in Asian trade on Tuesday as concern about a sluggish economy in China bringing down demand outweighed the impact of a blockade of oil production facilities in Libya.
“Oil remains under pressure given lingering Chinese demand concerns. Weaker than expected PMI data over the weekend would have done little to ease these worries,” said Warren Patterson of ING.
China’s purchasing managers’ index (PMI) hit a six-month low in August. On Monday, China posted the first decline in new export orders in eight months in July, and said new home prices grew in August at their weakest pace this year.
China’s yuan eased against the dollar on Tuesday as disappointing August factory activity data raised bets for more stimulus in the world’s second-largest economy.
With markets now firmly expecting the U.S. Federal Reserve to cut interest rates in September, many yuan traders said that could give Beijing more leeway to manoeuvre its own monetary policy.