The rupee fell 9 paise to 83.79 per US dollar on Monday against its previous close of 83.70/$1, LSEG data showed. An outflow of Rs 9,791 crore was seen from foreign investors from Indian equities today, BSE data showed.
Chinese stocks rose more than 8% today, traders said, as investor confidence grew due to concrete measures taken by the Chinese government after last week’s economic stimulus by the People’s Bank of China (PBOC).
“China is one of the most undervalued markets, while Indian markets are expensive and overvalued. After this government move seen last week from China to revive their economy, there is more confidence in concrete measures and hence money will flow to China”, said Ritesh Bhansali, Director, Maclai Financial. “Chinese equities have more comfort in terms of valuation”, he said.
Last week on September 24th, the PBOC said that in the near future it will reduce the amount of cash banks must hold as reserves, known as the reserve requirement ratio, by 50 basis points. The PBOC will also cut the seven-day reverse repo rate, its new benchmark, by 0.2 percentage points to 1.5%.
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The RBI appears to have provided some support to the rupee and the dollar was selling as the currency touched the 83.80/$1 level, traders said.
“RBI was present in the market today and was saving the rupee at 83.80/$1. We have seen some dollar selling by RBI after 10-12 days”, said Anil Bhansali, head of treasury at Finrex Treasury Advisors.
US Fed Chairman Jerome Powell is expected to speak after market hours today, giving a more concrete indication of further rate cuts by the US. The market now awaits the US Non Farm Payroll data (NFP) or employment data on Friday which will further influence expectations of a rate cut by the Federal Reserve.
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