Indian rupee rounded out a tough week with further declines in the late trade on Monday after the Reserve Bank of India surprised the markets by keeping repo rate unchanged at 6.50 percent.
At 1435, the rupee was trading at 74.08 a dollar, down 42 paise, from its Thursday’s close of 73.58. The home currency opened at 73.64 and touched a high and a low of 73.54 and 73.66 a dollar, respectively.
The local currency hit record low after the central bank stunned the investors by keeping the repurchase rate or the rate at which it lends to commercial banks unchanged, as against the market expectation of a 25 basis point cut.
The rupee is the worst performing emerging market currency having lost almost 15 percent since January this year. Between April and September the rupee has plummeted more than 7 to the dollar and has breached the psychological 73 mark last week.
The weakness in local unit comes as the US dollar remained broadly firm against global peers. Economic data signaled a thriving US economy which drove Treasury yields to a seven-year high of 3.23 percent – a level not seen since mid-2011.
Hawkish comments about the US economy by Federal Reserve Chairman Jerome Powell have also boosted the dollar buying.
Adding to the concerns were higher crude oil prices, which have reached four-year peaks as the market focused on upcoming US sanctions on Iran while shrugging off the year’s largest weekly build in US crude stockpiles.
Rising US interest rates and bond yields have encouraged investors to pull out funds from emerging markets to pocket better returns, analysts said.
According to provisional data from stock exchanges, foreign investors sold for a third day pulling out Rs 2,760.63 crore from share markets.
In debt markets, the yields on the 10-year government bonds fell 0.74 percent to 8.10 percent after closing at 8.11 percent on Thursday. Bond yields and prices move in opposite directions.
First Published: Oct 5, 2018 9:21 AM IST
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