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Journalism of Courage
The rupee on Monday plummeted by another 36 paise to hit a fresh 13-month low of 66.48 against the US dollar as rising crude prices, sustained foreign fund outflows and the possibility of a rate hike by the RBI hit the forex market sentiment. This is the lowest closing for the home currency since March 10, 2017.
The Reserve Bank of India stepped in to sell dollars through the public sector banks to reverse the free fall in the rupee, but the move failed to have much impact. The overall sentiment for the Indian currency deteriorated further following a sudden spike in crude prices coupled with impending Fed rate hike fears. With this, the rupee has fallen by 68 paise in the last two sessions.
On April 20, the rupee plunged by 32 paise to hit a 13-month low of 66.12 after the minutes of the Reserve Bank of India’s Monetary Policy Committee meeting suggested that the panel was likely to take a more hawkish tone starting as early as June. RBI Deputy Governor Viral Acharya and Executive Director Michael Patra, members of the 6-member MPC, turned hawkish and spoke about the withdrawal of accomodation.
India benefited the most from low oil prices for the better part of the past three years, enjoying a lower import bill and improving its trade balance and current accounts. Foreign investors and funds pulled out nearly Rs 8,000 crore from the Indian capital markets so far this month due to ‘considerable’ volatility in global markets on account of the ongoing trade negotiations and firming up of bond yields.
Meanwhile, stock markets ended with mild gains today after yet another choppy session as investors kept their faith in consumption stocks amid an encouraging start to the earnings season. The BSE Sensex rose 35 points to close at an over two-month high of 34,450.77, while the broader NSE Nifty finished at 10,584.70, up 20.65 points.
Government bond yields also rose marginally. The 7.17 per cent 10-year benchmark bond maturing in 2028 went down to Rs 96.14 from Rs 96.29 previously, while its yield rose marginally to 7.74 per cent from 7.72 per cent. The 6.79 per cent government security maturing in 2027 slid to Rs 92.87 from Rs 92.92, while its yield inched up to 7.91 per cent from 7.90 per cent. The 6.68 per cent government security maturing in 2031 dipped to Rs 89.63 from Rs 89.7525, while its yield edged up to 7.95 per cent from 7.93 per cent.
The 6.84 per cent government security maturing in 2022 and the 8.20 per cent government security maturing in 2022 were also quoted lower to Rs 96.6475 and Rs 101.58 respectively.
