Saturday , September 25 2021

Indian Rupee slides 23 paise to 1-wk low of 65.17 on Fed rate concerns

Mumbai : The Indian rupee on Monday slid by 23 paise to close at one-week low of 65.17 against the US currency due to concerns over widening current account deficit and a strong dollar ahead of a crucial US Federal Reserve meet.

The sentiment in forex market turned weak after the country’s current account deficit widened in the December quarter on the back of higher trade deficit.

The CAD, which shows the difference between foreign exchange earned and spent, rose to 2 per cent of the GDP at USD 13.5 billion in the December quarter against USD 7.2 billion or 1.1 per cent of GDP in the September quarter, according to the RBI data.

The US Federal Reserve is widely expected to hike interest rates for the first time in 2018 in its meet starting Tuesday — the first under new chief Jerome Powell — which weighed on the rupee, a dealer said.

Vinod Nair, Head of Research, Geojit Financial Services Ltd said the “rupee weakened due to widening current account deficit” and rising bond yields.

The yields on US government bonds rose to multi-year high ahead of the Federal Open Market Committee meet.

The rupee started on a negative note on Monday and hit the day’s low of 65.19 in intra-day levels at the Interbank Foreign Exchange (forex) market and remained under pressure for the better part of the session on a firm dollar overseas.

It finally settled down at 65.17, revealing a loss of 23 paise, or 0.35 per cent. The rupee earlier had closed at this level on March 9.

Meanwhile, the US dollar held firm against a basket of major peers in Asian trade as the increased threat of trade protectionism kept markets on edge.

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