Indian rupee opened at another life-low against the US dollar on Wednesday while bond yields spiked due to a rebound in crude prices amid simmering global trade war concerns.
At 09:10 AM, the rupee was trading at 72.85 a dollar, down 16 paise, from its Tuesday’s close of 72.69. The home currency opened at 72.64 and touched a high and a low of 72.63 and 72.90 a dollar, respectively.
So far this year, the rupee has weakened about 12 percent, while foreign investors have sold $424.80 million and $6.25 billion in equity and debt markets, respectively.
The rupee has been under immense pressure due to a host of reasons including soaring crude oil prices, sustained foreign fund outflows and widening current account deficit amid escalation in global trade war tiff.
According to Jahangir Aziz, head of emerging market Asia economic research at JP Morgan, there hasn't been sufficient policy action from the Reserve Bank of India (RBI) yet to stem rupee’s slide.
“I would have thought that by now, the RBI would have shown sufficient urgency to start raising rates now. If RBI plans to raise rates in October, why not raise it now ... September 12 is just as good or even better if they want that rate hike to be effective in stemming the rupee’s slide.”
In debt markets, the yields on the 10-year government bonds jumped 0.42 percent to 8.22 percent after closing at 8.18 percent on Tuesday. Bond yields and prices move in opposite directions.
The government will issue consumer price inflation and index of industrial production data on 12 September after 5.30 pm. According to CNBC-TV18 estimates, IIP will be at 6.7 percent for July from 7 percent a month ago. Retail inflation may come at 3.67 percent in August from 4.17 percent in July.
Traders await possible measures from the central bank and government to stem the currency’s declines.
First Published: IST