The rupee closed 0.30% against the US dollar at 71.24, even as the 10-year government bond yield ended at 7.273%, against Tuesday’s close of 7.252%

The Indian rupee fell for the fourth day on Wednesday following the gain in crude prices, closing 0.30% lower against the US dollar at 71.24. The 10-year government bond yield closed at 7.273%, against Tuesday’s close of 7.252%. The rupee depreciated amid higher bond yield and concerns over an expansionary fiscal policy in the budget. The rupee slid 1.16% in the past four days.

“India sovereign bond yields spiked today, as markets start pricing in the farm relief package. The new 2029 government bond yield maturing January quoted at 7.28% from yesterday’s 7.25%, is set for its highest close in over a month,” said V.K. Sharma, head, PCG and capital markets strategy at HDFC Securities.

India’s trade deficit narrowed to a 10-month low of $13.08 billion in December because of a fall in gold imports, the commerce ministry said in a note. In November, the trade deficit was $16.67 billion.

Analysts said the negative industrial output data and continuing exit of foreign institutional investors is likely to keep the rupee on tenterhooks.

So far this year, the rupee has declined 2.06%, while foreign investors have sold $449.10 million and $75 million in the equity and debt markets, respectively.

Most Asian currencies were trading lower amid a resumption of dollar strength and after a run of disappointing economic data highlighted the region’s growth challenges.

source: livemint.com