Mumbai: Indian rupee on Thursday weakened marginally against the US dollar in mid-day trading session.
At 2pm, the home currency was trading at 65.08 against the dollar, down 0.09% from its Wednesday’s close of 65.01. The rupee opened at 65.07 a dollar and touched a high and a low of 65.04 and 65.19, respectively.
The BSE benchmark index rose 0.06%, or 20.10 points, to 31,691.81. So far this year, the Sensex has gained over 18%.
Bond yield gained for the second session to hit near five-month high after the Reserve Bank of India (RBI) revised its inflation forecast to 4.2-4.6% for the second half of the fiscal year which, analysts said, lowers rate cut chances in the near future. RBI also cut statutory liquidity ratio by 50 basis points to 19.50%, which will help banks to lend more and invest less in the government securities.
The 10-year bond yield was at 6.732%, a level last seen on 15 May, compared to its previous close of 6.702%. Bond yields and prices move in opposite directions.
“Rising price pressure, volatility in Indian rupee along with policy normalization spree by various central banks (including US Federal Reserve and European Central Bank or ECB) has straitjacketed RBI in terms of an interest rate cut,” said Hitesh Jain, associate vice-president, research, IIFL Wealth Management.
“Although the prevalent inflation levels still remain benign, upside risks are quite evident in the broader basket. Higher government spending and chance of fiscal deficit target being missed also pose inflationary risks. Effectively, the monetary stance remains unchanged and thus space for further easing seems negligible. We see no policy move this calendar year,” added Jain.
So far this year, the rupee has gained 4.48%, while foreign institutional investors have bought $5.44 billion and $20.47 billion in equity and debt, respectively.
Asian currencies were trading mixed as traders awaited US non-farm payrolls report due on Friday. Thai baht was down 0.18%, Singapore dollar 0.13%, Malaysian ringgit 0.08% and Indonesian rupiah fell 0.05%. However, China renminbi was up 0.12%, Taiwan dollar 0.05% and South Korean won rose 0.04%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 93.5, up 0.04% from its previous close of 93.458.