Mumbai: The rupee weakened for third sessions against the US dollar on Friday tracking losses in the global equity and currencies markets amid rising tensions between US and North Korea.

At 2.15pm, the rupee was trading at 64.18 a dollar, down 0.15% from its Thursday’s close of 64.08. The rupee opened at 64.21 a dollar and touched a high of 64.27 – a level last seen on 26 July.

Globally, investors shunned riskier bets after US President Donald Trump issued a fresh warning to North Korea against attacking Guam or US allies after it disclosed plans to fire missiles over Japan to land near the US Pacific territory.

The benchmark Sensex index fell 1.17% or 368.68 points to 31,162.65. So far this year, it has risen over 18%.

Bond yield jumped on concerns of higher fiscal deficit after the Reserve Bank of India (RBI) paid lower dividend to the government.

The 10-year bond yield was at 6.5%, compared to its previous close of 6.494%. Bond yields and prices move in opposite directions.

Analyst said that lower than expected dividend payment by the Reserve Bank of India may affect fiscal math of the government.

RBI on Thursday said it will pay Rs 30659 crore as dividend to the government, less than half the surplus it transferred the previous year. Economists said lower returns from the central bank’s foreign asset holdings and the costs of demonetisation—printing new currency notes and managing the increasing liquidity in the banking system—were possible reasons for a fall in RBI’s profits.

In February, finance minister Arun Jaitley announced a fiscal deficit target or Rs 3.2% for fiscal year 2017-18. According to Comptroller General of Accounts data, the government already exhausted 80.8% of the fiscal deficit target of Rs 5.5 trillion during the April-June

So far this year, the rupee gained 6.3%, while foreign institutional investors (FIIs) bought $8.98 billion and $18.83 billion in equity and debt markets, respectively.

Asian currencies were trading lower. Philippines peso was down 0.51%, South Korean won 0.38%, China Renminbi 0.35%, Indonesian rupiah 0.23%, Taiwan dollar 0.17%, Malaysian ringgit 0.1%, Thai Baht 0.05%. However, Japanese yen was up 0.26%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 93.383, down 0.02% from its previous close of 93.401.
Source:livemint.com