Rupee recovers from seven-month low, trades flat against US dollar

The Indian rupee on Wednesday rebounded from a seven-month low and was trading little changed against US dollar after local equity markets gained for a 10th consecutive session.

At 2pm, the home currency was trading at 65.64 against US dollar, up 0.01% from its Tuesday’s close of 65.65. The rupee opened at 65.70 a dollar and touched a low of 65.77 a dollar—a level last seen on 28 September 2017.

Benchmark Sensex Index rose 0.27% or 91.15 points to 34,486.21 points. Year to date, its up 1%.

The rupee is under pressure due to external volatility such as rise in US bond yields, oil prices, geopolitical concerns and a trade war threat. Slowing inflows into local financial markets and the widening current account deficit have also dampened sentiment.

Also, the US Treasury department said that it would be adding India to the list of countries that it considers as potential currency manipulators added pressure.

Yields on 10-year government bond stood at 7.52% from its previous close of 7.489%. Bond yields and prices move in opposite directions.

So far this year, the rupee has fallen 2.7%, while foreign investors have bought $1.93 billion and $512.40 million in equity and debt markets, respectively.

Asian currencies were trading lower. Japanese yen was down 0.25%, China Renminbi 0.07%, Indonesian rupiah 0.05%, Thai baht 0.04% and Malaysian ringgit 0.04%. However, South Korean won was up 0.12%, Taiwan dollar and Singapore dollar were up 0.04% each.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 89.492, down 0.03% from its previous close of 89.516.