Mumbai: The Indian rupee on Monday erased all the gains and closed weaker against the US dollar for the eight consecutive session, after foreign institutional investors (FIIs) continued to liquidate their investment in debt markets. The fall in local equity markets for the fourth consecutive session also dampened sentiment.
The home currency closed at 67.50—a level last seen on 2 March, down 0.07% from its previous close of 67.45. The rupee opened at 67.30 per US dollar and touched a high and a low of 67.26 and 67.50, respectively. So far this year, the rupee has weakened 2%.
Foreign investors have turned net sellers of Indian debt following a steeper-than-expected increase in inflation in April, which has reduced the possibility of further interest rate reductions from the Reserve Bank of India (RBI). The increased probability of a hike in interest rates by the US Federal Reserve during its June meeting may add to the negative sentiment around emerging market debt.
Foreign institutional investors (FIIs) have sold nearly $860 million in debt over the last nine trading sessions and have been sellers on all but one trading session over this period. So far this year, FIIs have remained net sellers of Indian debt and have offloaded $903.14 million in domestic bonds.
India’s benchmark Sensex index fell 0.28%, or 71.54 points, to close at 25,230.36. So far this year, Sensex is down 3.4%. Year-to-date, FIIs have bought $1.97 billion from the local equity market.
India’s 10-year bond yield closed at 7.466%, as compared with its Friday’s close of 7.478%.
Asian currencies closed higher. Japanese yen was up 0.7%, South Korean won 0.62%, Indonesian rupiah 0.25%, Taiwan dollar 0.14%, Singapore dollar 0.07%. However, Thai baht was down 0.08% and China renminbi 0.06%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.341, up 0.01% from its previous close of 95.334.