Extending its fall to a fourth session in a row, the rupee dropped to a fresh closing low of 71.21 against the US dollar on Monday. The rupee had risen as much as 23 paise during Monday's session, boosted by fresh selling of the US currency by exporters and banks, but strength in the dollar reversed the gains. Factors such as rising global crude oil prices, concerns over US-China trade war, and contagion risks from Turkey and Argentina impacted forex market sentiment, dragging the rupee further from 71 levels. The rupee touched a life-time low of 71.25 against the dollar in intraday trade.
While robust data is providing some support to the currency, prevailing concerns on the current account deficit front are seen limiting the recovery, say analysts.
"Pick up in manufacturing and construction activity is a heartening sign. The next leg of growth could come in from pick up in gross fixed capital formation as the economy is now operating close to full potential," forex advisory firm IFA Global said in a note.
Official data released after market hours on Friday showed that GDP growth came in at a two-year high of 8.2 per cent in the April-June period. Strong performance of manufacturing and agriculture sectors drove the overall GDP figure, cementing India's position as the world's fastest growing major economy.
Separate data on Friday showed that growth in eight core sectors picked up to 6.6 per cent in July. The core sector - comprising coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity - had registered a growth of 2.9 per cent in July last year.
"Though the domestic data can bring about a cheer for a brief while, with the environment we are in right now, the rupee is more likely to track global cues. Likely range 70.57-71.00," IFA Global added.
The dollar index, which measures the greenback against six major currencies, was flat at 95.171, near a one-week high on worries over an escalation in trade conflicts between the US and its trading partners.
Meanwhile, domestic stock markets started the week on a lower note. BSE benchmark index shed 332 points to close at 38,312 while the NSE Nifty settled 98 points lower at 11,582.
(With agency inputs)
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