Rupee had closed at 71.11 on Tuesday.
Rupee had closed at 71.11 on Tuesday.

Rupee weakens against US dollar ahead of Fed decision

  • So far this year, the rupee has declined nearly 2% against US dollar
  • The Fed is expected to signal a pause in its rate hike trajectory

Indian rupee on Wednesday weakened against US dollar amid continued outflows from foreign investors. Traders also await the Federal Reserve’s policy decision and the country’s interim budget on 1 February. The rupee was trading at 71.32 a dollar, down 0.29% from its previous close of 71.11. The home currency opened at 71.38 a dollar. So far this year, the rupee has declined 1.88%, while foreign investors have sold $457.20 million and $303 million in the equity and debt markets respectively.

Bond yields fell after Reserve Bank of India detailed additional debt purchases for February via its open market operations. But gains were limited as the pace of purchases is less than the previous two months. RBI will purchase of government securities under OMO (open market operations) for an aggregate amount of 37,500 crore via three auctions of 12,500 crore each in February as against 50,000 crore each in December and January.

The 10-year bond yield was trading at 7.32% from its Monday's close of 7.332%. Bond yields and prices move in opposite directions.

Asian currencies were mostly trading higher. China Renminbi was up 0.3%, China Offshore 0.27%, Philippines peso 0.26%, Taiwan dollar 0.14%, Malaysian ringgit 0.1%, Singapore dollar 0.07%, Japanese yen 0.05%. However, Indonesian rupiah was down 0.22%, Thai Baht 0.18%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.774, down 0.05% from its previous close of 95.821.

(Bloomberg contributed this story)