Rupee weakens against US dollar in opening trade

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Mumbai: The Indian rupee on Tuesday weakened against the US dollar ahead of the key domestic as well as global events due later this week.

The rupee opened at 63.69 a dollar. At 9.15am, the home currency was trading at 63.69 a dollar, down 0.14% from its Monday’s close of 63.59.

The 10-year bond yield was at 7.432% compared to its previous close of 7.442%. Bond yields and prices move in opposite directions.

Domestically, all eyes are on the last budget before 2019 general elections that will be presented on 1 February. The government on Monday indicated that a “pause” in fiscal consolidation cannot be ruled out in fiscal year 2018.

“We believe that GVA growth for the next fiscal could be around 7.4% YoY and expect a pickup in inflation along with worsening of current account deficit. Given the considerable uncertainty around fiscal arithmetic at this time, it is important to monitor the progress of GST receivables and the quality and profile of expenditure. Our base case view remains that of mild consolidation after a breach in fiscal deficit in FY2018,” said ICICI Bank Global Markets report.

Globally, US Federal Reserve will hold a two-day policy meeting which begins Tuesday and ends with its statement Wednesday. This is the final FOMC policy under Janet Yellen and analysts expect more hawkish signals by noting a more upbeat economic assessment and higher inflation measures, Bloomberg reported.

Traders are also cautious before US President Donald Trump speech on Tuesday which may offer details on infrastructure spending plans.

The benchmark Sensex fell 0.02%, or 6.13 points, to 36,277.12. So far this year, it has gained 5.85%.

So far this year rupee gained 0.5% while foreign investors have bought $1.97 billion and $1.12 billion in equity and debt market respectively.

Asian currencies were trading lower. South Korean won was down 0.54%, Philippines peso 0.46%, Malaysian ringgit 0.33%, Indonesian rupiah 0.28%, Taiwan dollar 0.17%, Singapore dollar 0.11%, Japanese yen 0.09%, Thai Baht 0.08%. However, China renminbi was up 0.1%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 89.445, up 0.16% from its previous close of 89.308.livemint