Rupee weakens further against US dollar, hits fresh 6-month low

Mumbai: Indian rupee on Wednesday weakened further for the fifth consecutive session to hit fresh six-month low against the US dollar on continued liquidation by foreign investors in local equity and debt markets.

Earlier in the opening trade, the home currency opened at 65.38 and touched a high of 65.35. However, soon it erased all the gains and weakened to 65.55—a level last seen on 23 March. At 10am, it was trading at 65.54 a dollar, down 0.14% from its Tuesday’s close of 65.45.

According to analyst the fall in currency was due to outflows from local equity and debt markets on the fears of fiscal slippages and heightened tensions between US and North Korea. Since August, foreign institutional investors (FIIs) sold nearly $2.4 billion in equities, while in last three sessions, they sold nearly $210 million in debt markets.

The 10-year bond yield was at 6.672%, compared to its previous close of 6.669%. Bond yields and prices move in opposite directions.

The benchmark Sensex index fell 0.05% or 17.20 points to 31,582.56. So far this year, it has risen over 19.89%.

So far this year, the rupee has gained 4.2%, while FIIs have bought $6.39 billion and $20.36 billion in equity and debt, respectively.

Asian currencies were trading lower amid expectations that US President Donald Trump and Republican leaders will reveal their tax plan due later on Wednesday. According to a Bloomberg report, Trump will unveil a 35% individual tax rate, and the rate on corporations would be set at 20%, down from the current 35%.

Malaysian ringgit was down 0.29%, Thai baht 0.23%, South Korean won 0.17%, Japanese yen 0.16%, Singapore dollar 0.07%, Philippines peso 0.06%. However, China renminbi was up 0.07%, Hong Kong dollar 0.05%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 93.08, up 0.11% from its previous close of 92.966.