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Rupee Weakens To Over 2-Month Low; Crosses 72/Dollar Level

Olga Robert

On Wednesday, the Indian rupee extended its day's losses and depreciated to as much as 72.06 at 4:35 pm after the domestic stock markets closed lower.

NSE's Nifty 50 closed 0.61 percent lower at 11,840.45, while BSE's Sensex fell 0.57 percent to close at 40,116.06 points.

The currency is generally reflective of the movement in the stock markets. The two benchmark indices were at their two-week lows.

The rupee opened at 71.75, which is 29 paise lower than its Monday's close of 71.46.

On Tuesday, the currency and stock markets were closed for Guru Nanak Jayanti.

The 72-level was last seen in the first week of September.

Weak macro-economic data, Moody's degradation of outlook on India and global factors are among the key factors that have hurt the rupee in the recent past.

Last week, rating agency Moody's Investors Services lowered its sovereign outlook on India from 'stable' to 'negative' on mounting concerns over an economic slowdown in the country. It said that India's ongoing economic slowdown may become "entrenched" and "long-lasting," despite government measures.

On Monday, the Index of Industrial Production (IIP), a measure of India's industrial production, contracted to 4.3 percent in September, the lowest in almost eight years.

Concerns of slowing economic growth have become prominent. On Tuesday, in an SBI report said that India's GDP (gross domestic product) growth for the second quarter (Q2) of 2019-20 may further fall to 4.2 percent on low automobile sales, deceleration in air traffic movements, flattening of core sector growth and declining investment in construction and infrastructure.

It has also lowered the country's GDP growth forecast for the whole year to 5 percent from 6.1 percent earlier.

Further, US President Donald Trump, on Tuesday, threatened to "substantially" raise tariffs on China, if the ongoing talks of a trade deal between the two countries fail. Uncertainty over the trade strengthens the US dollar, a safe haven asset in times of political tensions.

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