With crude oil costs inching closer to the $85 mark and the greenback strengthening, the rupee on Monday depreciated sharply against the dollar, losing 37 paise to close at a 15-month low of 75.36. This is the 1st time the Indian currency has closed under the 75 level this year. Bonds sold off for the second straight session on Monday, driving up the yield on the benchmark to 6.345%, up 3 bps more than Friday’s close and to the highest levels given that April 17 2020.
Currency specialists observed that apprehensions increasing crude oil costs could push up the import bill, and narrow the present account surplus, are major to the rupee’s weakness. Last Friday, the rupee had fallen by 20 paise to finish at 74.99. Moreover, uncertainty surrounding the effect of the taper by the US Fed on capital flows, is adding to the nervousness. The Fed is anticipated to begin normalising policy, by stopping purchases ofbonds, in November.
Back home, despite the fact that Reserve Bank of India (RBI) left crucial prices and its accommodative stance unchanged on Friday, it signalled the begin of policy normalization, calling off the G-SAP. Critically, the reduce-off price of 3.99% for the Variable Reverse Repo Rate (VRRR) auction on Friday was larger than anticipated.
Experts anticipate the yield on the benchmark to move up to 6.4-6.5% by the finish of the year.
The stock markets, on the other hand, rallied on each benchmarks scaled new peaks. The Sensex hit an intra-day higher of 60,476.13 and closed 76.72 points or .13 per cent larger at 60,135.78 – a new closing higher. The Nifty breached 18,000 intra-day and closed at an all-time of 17,945.95.