Mumbai: The Indian rupee on Thursday weakened against the US dollar tracking its Asian peers after the US Federal Reserve signalled that it could change its bond investment policy this year. Traders are cautious ahead of the Reserve Bank of India’s (RBI) bi-monthly policy due after 2pm.
The rupee opened at 65.05 a dollar. At 9.15am, the rupee was trading at 65.06, down 0.27% from its Wednesday’s close of 64.88.
Most Fed policymakers think the US central bank should take steps to begin trimming its $4.5 trillion balance sheet this year as long as the economic data holds up, Fed meeting minutes showed.
According to a Mint poll, RBI is likely to hold rates and retain its neutral stance in the policy.
“Two things would be important to watch out for whether favourable global and domestic development turns monitory policy committee tone a little dovish, and what guidance the MPC provides on removing the excess liquidity in the system,” said Samiran Chakraborty and Anurag Jha, analysts with Citi Research, on 27 March.
Traders were also cautious ahead of the meeting between Trump and Chinese President Xi Jinping due later on Thursday, the first between the world’s two most powerful leaders.
So far this year, foreign institutional investors have bought $6.79 billion and $5.34 billion from local equity and debt markets, respectively.
The 10-year bond yield was trading at 6.651%, compared to its previous close of 6.649%. Bond yields and prices move in opposite directions.
The benchmark Sensex index rose 0.09% or 25.80 points to 30,000.04. So far this year, it has risen 12.6%.
Asian currencies were trading lower. South Korean won was down 0.72%, Taiwan dollar 0.32%, Thai baht 0.15%, Indonesian rupiah 0.14%, Malaysian ringgit 0.13%, China offshore 0.08%, China renminbi 0.05% and Singapore dollar 0.04%. However, Japanese yen was up 0.2%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 100.47, down 0.09% from its previous close of 100.56
Reuters contributed to the story
