Mumbai: The Indian rupee on Thursday weakened for a fourth consecutive session to hit a fresh seven-month low against the US dollar, while 10-year bond yield surged nearly 11 basis points after international crude oil prices surged.
Analysts believe that hardening oil prices may cause fiscal slippage and accelerating inflation.
At 2pm, the home currency was trading at 65.76 against US dollar, down 0.15% from its Wednesday’s close of 65.66. The rupee opened at 65.84 a dollar and touched a low of 65.85 a dollar—a level last seen on 28 September 2017.
Yields on 10-year government bond stood at 7.642%—a level last seen on 26 March, up 11 basis points from its previous close of 7.535%. Bond yields and prices move in opposite directions.
Traders are cautious ahead of the release of Reserve Bank of India’s minutes of its latest policy meeting after 5.30pm.
Oil prices reached a fresh three-year high ahead of a meeting between the Organization of Petroleum Exporting Countries and allies in Saudi Arabia on 20 April.
Benchmark Sensex Index rose 0.20%, or 68.07 points, to 34,399.75 points. Year to date, its up 1%.
The rupee is already 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.
So far this year, the rupee has fallen 2.7%, while foreign investors have bought $1.76 billion and $58.60 million in equity and debt markets, respectively.