The rupee opened at 71.34 a dollar (Bloomberg file)
The rupee opened at 71.34 a dollar (Bloomberg file)

Rupee ends lower as Fed officials divided on further rate cuts

  • The rupee ended at 71.33 a dollar, down 0.13% from Wednesday's close of 71.24. The Indian unit had opened at 71.38 a dollar
  • The yield on the 10-year Indian government bond was at 6.64% compared with its previous close of 6.624%

Mumbai: The Indian rupee on Thursday closed marginally lower against the dollar along with other Asian currencies as US policy makers were divided on the need for further rate cuts.

The rupee ended at 71.33 a dollar, down 0.13% from Wednesday's close of 71.24. The Indian unit had opened at 71.38 a dollar.

The US Federal Reserve lowered the target range for its key interest rate by 25 basis points to between 1.75% and 2%, with Chairman Jerome Powell saying the “moderate" policy moves should be sufficient to sustain US expansion.

However, in a sign of ongoing division within the Fed, seven policymakers projected one more quarter-point rate cut in 2019. Five others, in contrast, see the need to raise rates by the end of the year.

The Fed also made it crystal clear that it doesn’t want US money market rates to spike again like they did early this week, announcing it will — for the third day in a row — inject cash into this vital corner of finance.

Back home, traders will focus on Reserve Bank of India Governor Shaktikanta Das‘s speech on Thursday. Das will be speaking at an annual Bloomberg India Economic Forum.

The yield on the 10-year Indian government bond was at 6.64% compared with its previous close of 6.624%.

The benchmark equity index Sensex ended 1.29% lower at 36093.47 points. So far this year, the index has risen 0.07%.

In the year so far, the rupee has weakened 2.8%, while foreign investors have bought nearly $6.59 billion in Indian equities and $4.30 billion in debt.

Other Asian currencies were also weaker today. South Korean won was down 0.46%, Singapore dollar lost 0.31%, China Offshore declined 0.29%, Malaysian ringgit fell 0.27%, Indonesian rupiah lost 0.26%, Philippines peso declined 0.26%, China renminbi was 0.24%lower, Thai Baht and Taiwan dollar 0.1% each. However, the Japanese yen was up 0.48%.

The dollar index, which measures the US currency’s strength against a basket of major currencies, was at 98.51, down 0.05% from its previous close of 98.56.

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