Mumbai: The Indian rupee weakened for the sixth consecutive session, its longest losing streak since May 2016, on Thursday to hit a fresh six-month low against the dollar following a rout in equities over concerns of fiscal stimulus by the government.
The rupee opened at 65.79 and touched a low of 65.89—a level last seen on 14 March. At 9.15am, the rupee was trading at 65.86 against the dollar, down 0.22% from its Wednesday’s close of 65.71.
The BSE benchmark index, Sensex index rose 0.2% or 62.65 points to 31,222.46. So far this year, it the index has gained over 16%.
Foreign investors continued to pull out funds from local markets on mounting concerns of economic slowdown, higher than estimated fiscal deficit and weak growth in corporate profits.
The capital outflows started following reports of government announcing stimulus package in the coming days to boost the economy which will widen the fiscal deficit and douse hopes of further rate cuts by the Reserve Bank of India.
Additionally, geopolitical concerns are also weighing on the markets. The Indian Army announced on Twitter that it had gunned down insurgents along the India-Myanmar border early on Wednesday morning. Also, escalating tensions between US and North Korea and the decision by the US Federal Reserve to shrink its balance sheet starting next month has dampened investor sentiment.
The 10-year bond yield was at 6.682%, compared to its previous close of 6.667%. Bond yields and prices move in opposite directions. So far this year, the rupee has gained 3.2%, while foreign institutional investors have bought $6.13 billion and $20.26 billion in equity and debt, respectively.
Weakness in other Asian markets, too, weighed on the rupee. Asian currencies were trading lower as dollar gained for fourth sessions before the release of US economic growth data forecast to back the case for higher interest rates.
Indonesian rupiah was down 0.81%, South Korean won 0.64%, Taiwan dollar 0.47%, Thai baht 0.34%, Philippines peso 0.23%, Singapore dollar 0.17%, Malaysian ringgit 0.15%, China offshore 0.13%, China renminbi 0.11%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 93.522, up 0.17% from its previous close of 93.36.
Categories: Stock Market
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