Rupee trades flat against US dollar ahead of Fed policy decision

Mumbai: The Indian rupee was trading little changed against US dollar ahead of the outcome of US Federal Reserve’s two-day policy meeting due later on Wednesday.

At 2.05pm, the home currency was trading at 66.67 against US dollar, down 0.01% from its Friday’s close of 66.66. The rupee opened and touched a low of 66.78 a dollar. Markets were closed on Monday and Tuesday due to holidays.

Economists have penciled in three gradual interest rate hikes this year, but the Fed has signalled in March the path of future rate hikes could be “slightly steeper” over the next few years than previously thought, Reuters reported.

Traders are also awaiting US jobless claims and non-farm payrolls data due later in the week.

Bond yields fell after the Reserve Bank of India on Friday scrapped the residual maturity requirement for purchases by overseas investors of three years, and raised the cap for foreign ownership of any government security to 30% from 20%.

The yield on bonds maturing in 2021 slumped 10 basis points to 7.47%, while that on notes due in 2022 slipped six basis points to 7.72%. Yields on 10-year government bond stood at 7.735% from its previous close of 7.767%. Bond yields and prices move in opposite directions.

Benchmark Sensex Index rose 0.32% or 113.26 points to 35,273.62 points. Year to date, it’s up 2%.

So far this year, the rupee has fallen 4.32%, while foreign investors have bought $1.32 billion and sold $1.59 billion in equity and debt markets, respectively.

Asian currencies were trading lower. South Korean won was down 0.43%, China renminbi 0.40%, China offshore 0.27%, Indonesian rupiah 0.26%, Taiwan dollar 0.24%, Philippines peso 0.21%, Malaysian ringgit 0.07%. However, Japanese yen was up 0.16%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 92.361, down 0.1% from its previous close of 92.449.livemint