Rupee ends weak ahead of release of FOMC minutes

Rupee ended at Rs 62.58 compared with previous close of Rs 62.38 per dollar

Ahead of the release of the US Federal Open Market Committee (FOMC)’s minutes of the October meeting, the rupee ended weak as importers wanted to cover their positions as a measure of caution.

The rupee ended at 62.58 to a dollar, compared with the previous close of 62.38/dollar. The rupee had opened at 62.28 and during intra-day trades it touched a high of 62.24 and a low of 62.68 to a dollar.

Besides that, a fall in equity indices also dampened sentiments for the rupee. According to currency dealers there was also dollar demand from oil marketing companies which led to the rupee’s weakness.

Since the start of this financial year,  the rupee has weakened by more than 15 per cent.

Some currency experts do not see a rapid appreciation for the rupee as the India story still remains weak.

“I do not see rapid appreciation of the rupee coming through. The reason is because India still has its own problems. Our growth still remains extremely low, infrastructure projects are still stuck, corporates are still under stress due to which even banks are under stress. There are a lot of questions asked about fiscal deficit. Inflation is also a concern. A lot of these problems are solvable, but that there are elections around the corner due to which it might take a while for solutions to come through. The range of the rupee may be 61.50-63.50 till the end of this calendar year,” said G Ananth Narayan, regional co-head (global markets and wholesale banking, South Asia), Standard Chartered Bank.

 

Tracking the weakness in the rupee, government bond yields fell. The yield on the 10-year benchmark government bond 7.16% 2023 ended at 9.04% compared with previous close of 9.01%.