Mumbai: The rupee on Monday weakened past 65-mark against the US dollar after local equity markets fell for fifth consecutive sessions.
At 2.08pm, the rupee was trading at 65.01 a dollar, down 0.31% from its Friday’s close of 64.80. The home currency opened at 64.86 a dollar and touched a low of 65.03.
The benchmark Sensex index fell 1.34% or 429.12 points to 31,493.32. So far this year, it has risen over 18.5%. In last five sessions, Sensex declined over 2.8% or 924 points due to worries of overshooting fiscal deficit target and tensions between US and North Korea.
“Factoring in the global and domestic factors, we expect the 10-year benchmark yield in the range of 6.5-6.8% for the rest of FY2018. We hold on to our average USD-INR of 65.25 in FY2018 on the back of global monetary policy dynamics, geo-political risks, and India’s CAD-BOP dynamics”, said Kotak India in a note to its investors.
“We had factored in a narrowing of the real interest differentials and Fed’s likely monetary/QE withdrawal policy. The heightened geo-political risks strengthen our case for a depreciating bias for the INR against the USD for rest of FY2018” Kotak report added.
The 10-year bond yield was at 6.64%, compared to its previous close of 6.663%. Bond yields and prices move in opposite directions.
All eyes were on Prime Minister Narendra Modi’s announcement on stimulus packages for housing, power and exports sector.
So far this year, the rupee has gained 4.5%, while foreign institutional investors have bought $6.24 billion and $20.55 billion in equity and debt, respectively.
Asian currencies were trading lower. China offshore was down 0.25%, Japanese yen 0.21%, China renminbi 0.2%, Singapore dollar 0.12%, Thai baht 0.04%, Taiwan dollar 0.04%. However, South Korean won was up 0.47%, Malaysian ringgit 0.15%, Philippines peso 0.08%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 92.25, up 0.08% from its previous close of 92.171.