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Rupee weakens past 65 mark against US dollar, hits near-six-month low

LiveMint logoLiveMint 22-09-2017 Ravindra N. Sonavane

Mumbai: The rupee on Friday weakened past the 65 mark to hit near-six-month low against the US dollar as foreign investors continued to liquidate their holdings in the local equity markets due to domestic headwinds led by slowing growth, wider second quarter current account deficit and signs of a wider fiscal deficit.

The home currency opened at 64.93 a dollar and touched a low of 65.11, a level last seen on 5 April. At 9.15am, the rupee was trading at 65.10 a dollar, down 0.50% from its Thursday’s close of 64.80.

Since 1 August till date, foreign institutional investors (FIIs) have sold nearly $2.5 billion in local equity markets.

Earlier, Mint reported finance minister Arun Jaitley as saying that the government would soon announce measures to revive economic growth that has decelerated to the slowest pace in three years. Jaitley’s comments came against the background of the most serious economic challenge the government has faced since it came to power in 2014.

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, while current account deficit (CAD) soared to a four-year high of $14.3 billion, or 2.4% of GDP.

According to Reuters, Rs50,000 crore stimulus package was under consideration and fiscal deficit may have widened to 3.7% for fiscal year 2017-18.

The 10-year bond yield was at 6.683%, a level last seen on 19 May, compared to its previous close of 6.675%. Bond yields and prices move in opposite directions.

The benchmark Sensex index fell 0.09% or 30.54 points to 32,339.50. So far this year, it has risen over 21%.

So far this year, the rupee has gained 4.5%, while FIIs have bought $6.40 billion and $20.57 billion in equity and debt, respectively.

Asian currencies were trading mixed. South Korean won was down 0.54%, Malaysian ringgit 0.25%, China offshore 0.16%, Taiwan dollar 0.06% and Hong Kong dollar 0.05%. However, Japanese yen was up 0.64%, Philippines peso 0.25%, Indonesian rupiah 0.12%, China renminbi and Singapore dollar rose 0.05% each.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 91.993, down 0.29% from its previous close of 92.259.

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