Mumbai: Rupee on Monday weakened further to hit a fresh record low against the US dollar while 10-year government bond prices hit near a fresh four-year low after India’s current account deficit widened to a four-quarter high due to rising crude oil prices. At 11.35am, the rupee was trading at 72.46 a dollar, down 1.01% from its Friday’s close of 71.74. It opened at 72.11 per dollar.
The 10-year bond yield stood at 8.105%, from its previous close of 8.029%. Bond yields and prices move in opposite directions.
Benchmark Sensex Index fell 0.67% or 256.35 points to 38,133.47. Since January, it has gained 12.72%.
India’s current account deficit widened to a four-quarter-high at 2.4% of gross domestic product (GDP) in April-June period, from 1.9% of GDP in the January-March quarter of 2017-18, according to data released by the Reserve Bank of India (RBI).
“We expect the INR to remain under pressure on the back of intensifying of the EM crisis
and fear of a contagion and broad-based USD strength coupled with a deteriorating domestic macro scenario and domestic political uncertainty”,
said Kotak Institutional Equities in a note to its investors.
The brokerage firm expects the currency to range 69-74 for the rest of fiscal year 2019.
Rupee is badly effected due to trade war also
A fall in the home currency was also attributed losses in emerging
market currencies as the dollar was boosted by robust US jobs data
and risk appetite was hurt by President Donald Trump’s threat
to escalate the trade war with China.
The stronger-than-expected August US jobs report showed that
average hourly earnings accelerated to the fastest pace since 2009,
keeping the Federal Reserve on track to lift interest rates this month
and making another hike in December more likely.
President Donald Trump said he’s ready to impose tariffs on an additional $267 billion in Chinese goods, on top of a proposed $200 billion.
So far this year, the rupee has weakened 11.5%, while foreign investors have sold $424.80 million and $6.25 billion in equity and debt markets, respectively.
Asian currencies were trading lower. South Korean won was down 0.4%, China renminbi 0.25%, Philippines peso 0.23%, Singapore dollar 0.17%, Indonesian rupiah 0.11%, Taiwan dollar 0.08%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.437, up 0.08% from its previous close of 95.365.