BackRupee ends near 3- month low; bond yield 4-month high on worries of widening fiscal deficit
The rupee closes to near three month low against the US dollar and 10 year bond prices declined to four month low on the speculation of widening fiscal deficit
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Mumbai: The rupee on Thursday closed to near three-month low against the US dollar and 10 year bond prices declined to four month low on the speculation of widening fiscal deficit after finance minister said that the government may soon announce measures to revive economic growth.
The rupee closed at 64.80 a dollar—a level last seen on 3 July, down 0.81% from its Wednesday’s close of 64.27. The home currency opened at 64.50 a dollar and touched a low of 64.85—a level last seen on 5 July.
A Reuters report says that fiscal deficit may widened to 3.7% for fiscal year 2017-18. Arun Jaitley’s comments come against the background of the most serious economic challenge the government has faced since it came to power in 2014, Mint reported.
India’s gross domestic product (GDP) growth slowed to 5.7% in the quarter ended 30 June, the slowest in three years, from 6.1% in the preceding three months, sparking concern over the state of the economy.
According to an ET Now report, the government is looking to introduce stimulus package worth Rs40,000 crore and relax fiscal deficit target for this fiscal year.
The 10-year bond yield ended at 6.675%—a level last seen on 24 May, compared to its previous close of 6.577%. Bond yields and prices move in opposite directions.
The benchmark Sensex index fell 0.09% or 30.47 points to closed at 32,370.04. So far this year, it has risen over 21%.
So far this year, the rupee has gained 4.83%, while foreign institutional investors (FIIs) have bought $6.40 billion and $20.57 billion in equity and debt, respectively.
Fall in rupee was also due to losses in Asian currencies after US federal Reserve left rates unchanged.
Fed signaled that it still expects one more increase by the end of the year despite a recent bout of low inflation. The Fed, as expected, also said it would begin in October to reduce its approximately $4.2 trillion in holdings of U.S. Treasury bonds and mortgage-backed securities acquired in the years after the 2008 financial crisis, Reuters reported
Indonesian rupiah was down 0.43%, South Korean won 0.39%, Singapore dollar 0.33%, Japanese yen 0.28%, Taiwan dollar 0.26%, China renminbi 0.25%, Malaysian ringgit 0.25%, Philippines peso 0.16%, Thai Baht 0.11%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 92.534, up 0.03% from its previous close of 92.51.
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