INR slides against the greenback on the interbank market after India’s GDP growth rate tumble to a 6-year low. On the currency market, the Rupee depreciated by 52 paise settling at 71.63 against the US dollar. But not before touching a low of 71.11.
During the early Asia trading hours and after the London open, the USD/INR exchange rate was seen quoted within a range of 71.70 – 71.55, as Rupee struggles to recover.
Last week’s trading session saw the USD/INR exchange rate fluctuate within the range of 71.11 – 71.73. The dollar index closed on a negative tone during the previous week’s trading session and settled at 98.27.
India’s Growth Domestic Product growth rate tumbles to a modest 4.5% in the third quarter of 2019. This was the worst reading since 2013. It’s also the first time since 2012 when the GDP growth rate has fallen below the 5% mark. The gloomy economic activity has added some selling pressure on the domestic currency.
In other news, RBI lowered its GDP growth forecast for the fiscal year 2019-2020 from 6.9% down to 6.1%. The Reserve Bank of India (RBI) has also slashed interest rates by a total of 135 basis points since the beginning of the year in an effort to stimulate its sterile economy.
Asia’s third largest economy is now at risk to enter into recession, which will most likely prompt the RBI to act again on its interest rate policy and deliver further rate cuts in 2020.
The domestic benchmark equity index, NIFTY 50, sold off after touching a new all-time high and settled at 12056. During early Asia trading hours, NIFTY 50 sold off and was seen trading at a low of 12017. The Indian 10-year government bond yield closed at 6.48 versus 6.46 previous closing prices.