Rupee hits three-month low against US dollar in early trade


Mumbai: The Indian rupee and other Asian currencies have weakened against the US dollar on Wednesday following hawkish comments from US Federal Reserve chair Jerome Powell.

The rupee weakened past 65-mark to hit a three-month low. It opened at 65.10 and touched a low of 65.14 a dollar, a level last seen on 16 November 2017. At 9.15am, the rupee was trading at 65.10, down 0.35% from its previous close of 64.80.

Yields on 10-year government bonds were at 7.69% compared to Tuesday’s close of 7.67%. Bond yields and prices move in opposite directions.

The new US Fed chief said the outlook for the US economy had strengthened since December, and that inflation appeared to be moving up to the target. If that optimism translates into a faster pace of rate hikes, it would reduce the attractiveness of developing-nation assets, Bloomberg reported.

The local currency was also pressured due to a fall in the local markets after state-owned Punjab National Bank said that the amount of fraudulent transactions could go up by around $204 million.

India’s benchmark Sensex index fell 0.53% or 180.71 points to 34,179.49. So far this year, Sensex has risen 0.5%.

Moreover, traders are also awaiting gross domestic product (GDP) data for the December quarter due to be released after 5.30pm. GDP is estimated to rise to 7% in three months to December year-on-year, according to a Bloomberg survey, versus 6.3% in the previous quarter.

Year to date, the rupee weakened 1.1%, while foreign investors have bought $506.80 million and $1.41 billion in equity and debt markets, respectively.

Asian currencies were trading weaker. South Korean won was down 1.04%, Malaysian ringgit 0.47%, Indonesian rupiah 0.28%, Taiwan dollar 0.23%, China renminbi 0.18%, Singapore dollar 0.13%. However, Philippines peso was up 0.18% and Japanese yen 0.08%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 90.458, up 0.11% from its previous close of 90.355.livemint