Mumbai: The Indian rupee on Tuesday weakened past 65 mark against the US dollar after International rating agency Standard and Poor’s ruled out upgradation of India’s rating for the next two years.
The home currency closed at 65.06 per US dollar, down 0.15% from its previous close of 64.81. The local unit had opened the session at 64.96.
S&P said it does not expect to change India’s rating this year or next year based on its current set of forecasts, but warned that pressure on the rating could emerge again. It has affirmed its “BBB-" long-term and “A-3" short-term sovereign credit ratings for India. The outlook for country remains stable, the agency said in a statement on Monday.
“Downward pressure on the ratings could re-emerge if growth disappoints (perhaps as a result of a stalling of reforms), if, contrary to our expectations, the new monetary council is not effective in achieving its targets, or if the external liquidity position of the nation deteriorates more than we currently expect," S&P said.
The benchmark Sensex index fell 58.09 points, or 0.21%, to close at 27,306.83 points.
The yield on India’s 10-year benchmark bond closed at 7.58% compared with its Monday’s close of 7.57%. Bond yields and prices move in opposite directions.
Since the beginning of this year, the rupee has lost 3.08% against the US dollar, while foreign institutional investors (FIIs) have bought $4.33 billion from local equity and $8.74 billion from bond markets.
Most Asian currencies closed lower. The Malaysian ringgit was down 1.38%, Indonesian rupiah 1.21%, South Korean won 0.85%, Philippines peso 0.55%, Japanese yen declined 0.13%. However, China offshore spot was up 0.24%, China renminbi 0.19% and Thai baht 0.15%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.649, down 0.3% from its previous close of 94.928.
Federal Reserve chair Janet Yellen will deliver a speech at the Labor Hall of Honor induction ceremony in Washington. The US Fed chair could shed some light on the state of the US economy, which may give hint on what the US central bank is up to in its forthcoming two-day policy review on 27-28 October, according to a Reuters report.
Traders are awaiting more clues from European Central Bank (ECB) president Mario Draghi on the possible extension of the ECB’s stimulus programme at its meeting on Thursday, the report added.