Rupee closes at 15-month low against US dollar
The rupee closed at 67.14 against US dollar—a level last seen on 8 February 2017, down 0.41% from its previous close of 66.87
Mumbai: The Indian rupee on Monday weakened past 67-mark to hit a 15-month low against US dollar after foreign investors continued to liquidate its holdings in local equity and debt market amid surging crude oil.
The home currency closed at 67.14 against US dollar—a level last seen on 8 February 2017, down 0.41% from its previous close of 66.87. The currency opened at 66.82 and touched a low of 67.18. Year to date, it lost over 4.5%.
Since the beginning of April, foreign investors in both equity and debt sold a combined $3.29 billion. So far this year, they have bought $1.12 billion and sold $2.05 billion in equity and debt markets, respectively.
US oil rose above $70 a barrel for the first time since November 2014 as traders braced for a re-imposition of US sanctions on Middle East crude producer Iran.
The dollar climbed back towards its highest level in 2018 as investors continued to bet that rising interest rates in the United States would boost the greenback.
The index measuring the dollar against a basket of currencies rose 0.2% to 92.749, not far from the 92.9 level—a 2018 high—it hit on Friday.
Meanwhile, the government 10-year bond yield tumbled nearly 11 basis points, declining for the fourth straight session, after the Reserve Bank of India (RBI) announced open market operations (OMO) next week.
The 10-year bond yield closed at 7.623%, down 11 basis points, from its previous close of 7.728%. Bond yields and prices move in opposite directions.
RBI on Friday said that it will buy government bonds worth up to Rs10,000 crore on 17 May. The purchase of securities will be made under the central bank’s open market operations (OMOs). The decision is based on the “assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward”.
“We believe this announcement should be seen as a positive surprise by the bond market as it comes earlier than expected and especially amid liquidity surplus conditions”, said Vivek Rajpal, analyst at Noumura Research, in a 5 May note.
The move will bring some relief to the bond market which is reeling under the pressure of rising yields despite a slew of regulatory measures.
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