Mumbai: The Indian rupee erased most of the morning losses and was trading little changed against the US dollar on Monday, as traders avoided taking long positions ahead of the announcement of the Union budget for fiscal 2016-17. The rupee is just 0.32% away from its all-time low of 68.85, which it hit on 28 August 2013.
At 9.55am, the home currency was trading at 68.62, up 0.01% from its previous close of 68.63. The local currency opened at 68.69 a dollar and touched a high and a low of 68.62 and 68.75, respectively.
India’s benchmark Sensex index fell 0.07% or 15.79 points to 23,138.51. So far this year, Sensex has fallen 11.35%.
All eyes will be on the government projection of the fiscal deficit for fiscal 2016-17, but markets are also watching announcements surrounding banking and infrastructure reforms.
Some analysts expect the government to stick to a fiscal deficit target of 3.5% for 2016-17, but others say that the target may be higher in order to accommodate increased public investment, implementation of One Rank One Pension (OROP) scheme and the recommendations of the Seventh Pay Commission.
India’s 10-year bond yield was at 7.755% from its Friday’s close of 7.783%.
The rupee has slipped and bond yields have risen as foreign investors have started selling Indian bonds in recent days, in addition to the selling pressure seen across the equity markets.
Since the beginning of this year, the rupee has lost 3.61%, while foreign institutional investors have sold $2.54 billion from local equity and $757.30 million in debt markets.
Most Asian currencies were trading lower. Malaysian ringgit was down 0.43%, Philippines peso 0.28%, South Korean won 0.25%, Singapore dollar 0.16%, Singapore dollar 0.16%, China renminbi 0.12%, Indonesian rupiah 0.09% and China offshore 0.07%. However, Japanese yen was up 0.57%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 98.052, down 0.09% from its previous close of 98.148.