LM:Rupee at 62.78 against dollar as market rout continues
Mumbai: The rupee continued to weaken on Monday touching fresh lifetime low to trade at 62.78 against the dollar, or 1.77% down, as sentiments remained weak in the financial markets, while the yield on India’s 10-year benchmark bond touched a high 9.017%.
Meanwhile, the equity benchmark BSE Sensex extended its losses, falling 2.13%, or 396.74 points, to 18,201.44 at 2:07pm on weak market sentiment. The broader 50-share National Stock Exchange’s (NSE’s) Nifty was down 2.23%, or 123 points, to 5,384.85.
The 10-year government bond yields hit a five-year high, with the 10-year bond at 9%, up 1.05 percentage points from its previous close.
“Basically, it is the rupee effect. People have lost confidence that this government will be able to put things in place,” said Ambareesh Baliga, managing partner, Edelweiss Global Wealth.
In the equity markets, the BSE Auto and Bankex sector fell the most among sectoral indices, and were down 4.03% and 3.5%, respectively.
Private lenders ICICI Bank Ltd and HDFC Bank Ltd declined 3.27% and 2.26%, respectively.
Engineering and construction firm Larsen and Toubro Ltd (L&T) was down 3.19%.
The Indian rupee had opened the Monday session at 62.35 per dollar, while the 10-year paper had begun trade at a yield of 8.945%. The 10-year yield had last touched 9% level on 25 August 2008, according to data from Bloomberg. Bond prices and yield move in the opposite direction.
On Friday, when the rupee first touched 62.01 per dollar level, the domestic market had crashed, dropping some 750 points on fears that the US Federal Reserve will soon withdraw its easy money policy.
Tightness in liquidity and RBI measures of limited capital controls on resident individuals and companies also sparked fear of a growth slowdown in the domestic market and foreign investors liquidated their holdings and withdrew dollar.
At 2:09pm, the Indian currency was trading at 62.655 per dollar, down 1.57%.
