Rupee under pressure on Rexit effect

Rupee under pressure on Rexit effect

20/06/2016 12:50

The Indian rupee nosedived nearly 1 per cent in early trade on Monday in a knee-jerk reaction to Raghuram Rajan’s abrupt decision to step down as the RBI governor following the end of his term in September. However, recovery in the Indian equities helped rupee pare some of early losses.

At MCXSX, USDINR for June 2016 contract traded at Rs. 67.4800 per dollar, rupee depreciated by 30 paise, after opening at Rs. 67.4500 against the previous closing price of Rs. 67.1750. Rupee declined to intra-day low of Rs. 67.7800 per dollar with a contract volume of 2,17,031 till the trading. (At 12.55 PM today).

The market experts opined that Rajan’s exit could spell volatility for equities and the rupee which may also take a hit from heightened global economic uncertainty amidst fears that a potential exit of the UK from the European Union may weaken the global economy.

The Brexit referendum slated on June 23, 2016 will decide whether the UK will break away from the European Union, an event which could hurt capital flows to emerging markets.

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