Mumbai: The Indian rupee on Friday weakened for the fourth consecutive session to hit a five-week low against the US dollar, tracking volatile local equity markets ahead of the rollout of goods and services tax (GST) from 1 July.
The rupee opened at 64.72 a dollar and touched a low of 64.73—a level last seen on 24 June. At 9.15am, the rupee was trading at 64.69 a dollar, down 0.15% from its Thursday’s close of 64.63.
The government will hold a special midnight session of Parliament on 30 June to rollout GST. The GST will replace the existing multiple indirect taxes with uniform tax across India, making it easier to do business in Asia’s third-largest economy and in turn boost domestic stocks.
But the markets will need some time to adjust to the GST implementation process, which could partially hurt corporate earnings, although the ill-effects will likely fade in the long term,
The 10-year bond yield was at 6.509%, a level last seen on 12 June, compared to its previous close of 6.507%. Bond yields and prices move in opposite directions.
The benchmark Sensex index fell 0.01% or 0.12 points to 30,857.40. So far this year, it has risen 15.9%.
So far this year, the rupee has gained 5.1%, while foreign investors bought $8.40 billion and $14.40 billion in local equity and debt markets, respectively.
Asian currencies were trading higher as dollar extended losses with bonds as central banks worldwide shift towards a more hawkish tone.
China offshore spot was up 0.49%, China renminbi 0.3%, Japanese yen 0.3%, Philippines peso 0.2%, Singapore dollar 0.15% and Thai Baht 0.12%. However, South Korean won was down 0.21%, Indonesian rupiah 0.08% and Taiwan dollar 0.06%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.542, down 0.09% from its previous close of 95.63.
US inflation remains in focus due later on Friday with the core PCE deflator, a favourite Federal Reserve measure. Analysts expect the month-over-month number eased to 0.1% for May and the annual rate slowed to 1.4%. Personal income and spending are also expected to grow more slowly than the 0.4% rise in April, according to a Bloombergreport.