Mumbai: The Indian rupee on Thursday hit one-year low against US dollar as traders fretted that expensive oil may led to a fiscal slippage, increase inflationary pressures and lower the chances of a interest rate cut by the Reserve Bank of India (RBI).
On Thursday, the rupee weakened for fourth session against US dollar while bond yields hit a near one-month high.
Rupee ended the day at 65.80 against US dollar—a level last seen on 14 March 2017—down 0.19% 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.
Yields on 10-year government bonds closed at 7.63%—a level last seen on 26 March—up 10 basis points from its previous close of 7.535%. Bond yields and prices move in opposite directions.
Oil prices reached a fresh three-year high ahead of an Opec meeting on 20 April.
On Thursday, the benchmark index Sensex rose 0.28%, or 95.61 points, to 34,427.29 points; year to date, it is up 1%.
The rupee is already under pressure due to external factors, such as rising US bond yields, geopolitical concerns and a trade war threat. Slowing FDI 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 in 2018, the rupee has fallen 2.7%, while foreign investors have bought $1.76 billion and $58.60 million in equity and debt markets, respectively.