Rupee Hits Two-Month Low Against US Dollar, Bond yields at Two-Year High

Gold Silver Reports – Rupee Hits Two-Month Low Against US Dollar, Bond yields at Two-Year High — The Indian rupee on Tuesday hit a two-month low against the US dollar as foreign investors continued to liquidate their positions in local equity markets.

At 9.31am, the home currency was trading at 64.50, down 0.48% from its previous close of 64.22. The local currency opened at 64.49 and touched a low of 64.53 a dollar, a level last seen on 18 December 2017.

In the last eight sessions, foreign institutional investors (FIIs) sold nearly $1.4 billion in equity, while they have bought $1.02 billion so far this year. Since the beginning of this year, the rupee has fallen 1%,

Analysts believe that FIIs are selling for the last few sessions due to a disappointing budget and the recent $1.8 billion Punjab National Bank fraud that may turn into a contagion.

India’s benchmark Sensex index rose 0.41% or 114.15 points to 34,411.62. So far this year, Sensex has fallen 0.83%.

Traders will be closely watching US Federal Reserve minutes to be released on Wednesday for more clarity on the central bank’s rate hike path.

Bond yields hit a two-year high on worries of shrinking banking system liquidity and higher US yield.

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India’s 10-year bond yield was at 7.613%, a level last seen on 11 March 2016, compared to its Friday close of 7.578%. Bond yields and prices move in opposite directions.

So far this year, FIIs have bought $1.85 billion in debt markets.

Currency and bond markets were closed on Monday for a holiday.

Fall in Asian currencies also dampened the home currency. South Korean won was down 0.47%, Japanese yen 0.16%, China offshore 0.13%, Singapore dollar 0.13%, Thai baht 0.13%, Malaysian ringgit 0.1% and Indonesian rupiah 0.09%. However, Philippines peso was up 0.43% and Taiwan dollar rose 0.09%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 89.367, up 0.3% from its previous close of 89.10. – Goldman Neal Bhai Reports

US Dollar Q1 2021 Forecast
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