A flat equity market drives rupee down against US dollar

K.T. Jagannathan

The happenings on the Indo-China border continue to drive the course of markets in India. The direction is indeed regulated by global cues.

On a day when India overtook Brazil to report the second highest number of Covid-19 cases, the bourses remained somewhat flat. Key stock indices were up marginally on Monday. That that they managed to sneak into the Green terrain is of some satisfaction. Global shares too edged up after a rout last week.

The NSE Nifty-50 closed up by 0.19% on Monday at 11,355.05. The BSE Sensex ended 0.16% higher at 38,417.23. Both indices fell over 2.6% last week. The swings on either side have been volatile. Traders will do well to be cautious. Active position management will be the key for sometimes to come at least.

The somewhat flat equity market seems to have a bearing on the Indian rupee. The Indian currency on Monday fell against the U.S. dollar. Opening at 73.18, the rupee lost further ground and slipped to 73.44 at the day's low. The rupee settled at 73.34 against the American currency, down 20 paise from its previous close of 73.14.

The dollar index, which gauges the greenback's strength against a basket of six currencies, in the meanwhile, rose 0.3 per cent to 93.023.

Developments on the Indo-China border are closely watched. Both sides have remained unyielding. Any escalation in the tension could pose upside risks to the dollar-rupee equation.

All eyes are also on the ensuing monetary policy announcement by the ECB. The policy is slated to be announced on Thursday.