Rs dips 39p to near one-month low of 68.38 per $ on trade war

Mumbai: The rupee on Tuesday nosedived 39 paise to hit a near one-month low of 68.38 against the US dollar as escalating trade threats between the world's two biggest economies continued to spiral.

Increasing prospects for a full-blown US-China trade war triggered a risk-off atmosphere in many global currency markets after US President Donald Trump ordered to impose another round of tariffs on more Chinese goods, prompting China to retaliate.

World stocks too reacted negatively with significant falls in Asia that carried through to Europe.

Domestic forex market sentiment succumbed to bouts of pressure on revival of fresh global trade war fears and concerns about possibility that the adverse US trade policy will have a substantial impact on the Indian economy.

The rapid surge in global crude oil prices has already had an adverse impact on the country's fiscal arithmetic.

The home currency crumbled to hit a intra-day low of 68.39 in later afternoon on panic dollar buying.

On the energy front, crude prices dropped, weighed down by expectations that producer group OPEC and key ally Russia will gradually increase output.

Brent crude futures, an international benchmark, is trading up at $74.39 a barrel, in early Asian trade.

Bond markets, however, staged rebound and the 10-year benchmark bond yield finished a tad lower at 7.86 per cent as compared to 7.88 per cent.

Earlier, the rupee opened almost flat at 67.98 from overnight close of 67.99 at the interbank foreign exchange (forex) market.

But, later suffering in a deeper risk-off reaction, the local unit descended sharply to hit a low of 68.39 before ending at 68.38, showing a steep loss of 39 paise, or 0.57 per cent.

This is the lowest closing for the rupee since May 23.