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Rupee closes weaker against US dollar at 67.98; bond yield jumps to 23-week high |
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Mumbai: The Indian rupee weakened against the US dollar and bond yield jumped to 23-week high in the absence of clear indication of further rate cuts by the Reserve Bank of India (RBI).
The rupee closed at 67.98 a dollar, down 0.21% from its previous close of 67.84. The local currency opened at 67.85 a dollar and touched a high and a low of 67.78 and 67.99, respectively.
The yield on India’s current 10-year benchmark bond closed at 7.849%—a level last seen on 24 August 2015, compared with its Monday’s close of 7.792%. It opened at 7.792% and touched a high of 7.852%—a level last seen on 25 August 2015. Bond yields and prices move in opposite directions.
RBI on Tuesday decided to keep key policy rates unchanged but maintained that it would use any available space that emerges to reduce interest rates. While explaining its policy stance, RBI said it would watch for continued fiscal consolidation and the direction of global commodity prices as it assesses the room for further rate reductions.
Following the monetary policy review, the benchmark repo rate, or the rate at which RBI lends money to banks, remains unchanged at 6.75%. Nine of 10 economists polled by Mint had indicated that the central bank would maintain status quo in its policy.
In his media interaction, RBI governor Raghuram Rajan stressed on the need for fiscal consolidation to cut rates further but didn’t elaborate on what aspects of the budget would prompt RBI to pare rates.
India’s benchmark equity index, BSE Sensex, closed at 24,539 points, down 1.15%, or 285.83 points. So far this year, the Sensex has lost over 6%.
Year-to-date, the rupee has weakened 2.68%, while foreign portfolio investors have sold $1.70 billion from local equities and bought $230.7 million in debt.
Most of the Asian currencies closed lower. Malaysian ringgit was down 1.12%, South Korean won 0.58%, Thai baht 0.47%, Indonesian rupiah 0.43%, Singapore dollar 0.32%, and Philippines peso 0.31%. However, Japanese yen was up 0.15%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 98.979, down 0.04% against its previous close of 99.009.
Source : livemint.com
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