Rupee drops from six-month highs against the US dollar amid tensions at China’s border

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The Indian rupee gave up its early gains and fell sharply against the US dollar amid renewed border tensions with China. India said Chinese troops on the night of August 29-30, 2020 violated the previous consensus reached during military and diplomatic engagements during the ongoing standoff in eastern Ladakh and led moves provocative military to change the status quo.

“Indian troops have prevented this PLA activity on the southern shore of Pangong Tso Lake, have taken steps to strengthen our positions and thwart Chinese intentions to unilaterally change the facts on the ground,” the government said.

The partially convertible rupee closed at 73.62, much lower than the 73.24 level reached earlier in the session – its strongest since March 5. The rupee closed at 73.40 in the previous session.

On Friday, the rupee finished at its highest level against the US dollar since March amid general weakness in the US dollar, month-end sales by exporters and the lack of nationalized supply banks, according to analysts.

The Sensex lost over 600 points late in the session, giving up strong early gains.

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Earlier in the day, the rupee posted losses following the dollar and a rise in its Asian peers. The dollar was on the verge of registering its fourth consecutive monthly decline in August.

GDP data for the June quarter is expected to be released later today. According to a Reuters poll, the Indian economy contracted by 20% in the first quarter of 2020/21, its worst performance in decades.

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