Rupee weakens against US dollar ahead of RBI minutes

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Mumbai: The Indian rupee weakened further against the US dollar ahead of the Reserve Bank of India’s (RBI) minutes for the latest policy meeting due after 5pm on Wednesday.

At 9.15am, the home currency was trading at 64.87, down 0.12% from its previous close of 64.79. The local currency opened at 64.94 and touched a low of 64.94 a dollar, a level last seen on 22 November.

Yield on 10-year government bond was at 7.668% compared to its Tuesday’s close of 7.673%. Bond yields and prices move in opposite directions.

“… committee’s members views on the inflation outlook likely to be under close scrutiny,” Radhika Rao economist at DBS Bank Ltd said in a 21 February report.

Rao said the policy rates are likely to stay unchanged at the next meeting. She said shorter-tenor bonds are relatively more attractive and elevated yields are driven largely by tight liquidity.

“10-year bonds are likely to be much more volatile and we still see scope for yields to touch 7.9-8% in the coming quarters,” Rao added.

India’s benchmark Sensex index rose 0.28% or 93.31 points to 33,796.90. So far this year, Sensex has fallen 0.83%.

Traders are also watching US Federal Reserve minutes to be released on Wednesday in the US for more clarity on the central bank’s rate hike path.

Year to date, rupee weakened 1.5%, while foreign investors have bought $1.20 billion and $1.77 billion in equity and debt markets, respectively.

Asian currencies were trading lower. Japanese yen was down 0.5%, Malaysian ringgit 0.13%, Taiwan dollar and South Korean fell 0.12% each, while Thai baht declined 0.8%. However, Philippines peso was up 0.23% and Indonesian rupiah 0.19%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 89.793, up 0.08% from its previous close of 89.716.livemint