Dollar closed at 63.5450 against its opening of 63.5200. Dollar seen down as the greenback plunged to a fresh three-year low after the Trump administration signalled that it preferred a weaker currency. Dollar index, which weighs greenback against a basket of six major currencies dropped to its lowest level since Dec 19, 2014 and traded at 89.06 Thursday compared to 89.69 at close of Indian Market Wednesday. At the World Economic Forum in Davos, US Treasury Secretary, Steve Mnuchin favoured a weak dollar to support US exports. Munchin said that a "weaker dollar is good for trade."
The greenback dropped to a fresh low in three years after Munchin's words and spurred the market to assess what next steps the Trump administration would take to lower the country's $500 billion trade deficit, a long-stated policy goal. Asian stocks traded lower on concerns of trade war after US Treasury Secretary Steven Mnuchin backed weakness in dollar saying it will benefit trade. Indian stocks open higher after Finance Minister, Arun Jaitley furnished recapitalisation plan for the public sector banks. Jaitley announced that the government will infuse Rs 881.39 billion into PSU banks with Rs 800 billion through issuances of recapitalisation bonds. Also, investors expect government may take measures to boost the rural economy that will drive up the demand from rural sector.
Investors are also looking forward to today's policy decision from the European Central Bank. ECB President Mario Draghi may ignore the hawkishness surrounding the robust euro area economy to signal a dovish stance later today.
BSE Sensex closed lower by 111.20 points to 36,050.44, while the Nifty 50 fell 16.35 points.
INTERNATIONAL
Asian shares traded lower after Trump administration officials’ rhetoric on trade and the dollar roiled financial markets, sending the U.S. currency to its lowest level in three years and whipsawing stocks that had been buoyed by strong earnings.
Gold prices gained in Asia after an initial small gain in the dollar index was reversed and favored physical buying of the greenback-denominated commodity with investors still pondering an apparent switch in the US strong dollar policy by the US Treasury Secretary Steven Mnuchin overnight.
South Korea's economy unexpectedly shrank in the last quarter as struggling car exporters and industrial production failed to keep up the previous quarter's dashing pace, posting its worst performance since 2008.
Brent oil prices hit $71 per barrel for the first time since 2014 as the dollar continued to weaken and crude inventories in the United States fell for a 10th straight week amid ongoing supply cutbacks by OPEC and top producer Russia.