Rupee closes two month low against US dollar

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The Domestic currency closed at 73.47 a level seen on 28 December 2020, losing 1.42% from its previous close of 72.42 (REUTERS)The Domestic currency closed at 73.47 a level seen on 28 December 2020, losing 1.42% from its previous close of 72.42 (REUTERS) 2 min read . Updated: 26 Feb 2021, 09:05 PM IST Ashwin Ramarathinam The dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.59% to 90.665Among Asian currencies, Indian Rupee was the biggest loser followed by South Korean Won losing 1.39%, Indonesian Rupiah declined 1.07% and Singapore Dollar fell 0.27%

Mumbai: Indian rupee weakened to close at two month low against the US dollar on Friday tracking the slump in domestic equities and a global selloff in risk assets sparked by the surging U.S yields.

The Domestic currency closed at 73.47 a level seen on 28 December 2020, losing 1.42% from its previous close of 72.42.

10-year yields climbed 33 basis points this month, the biggest advance for the benchmark notes since April 2018; it rose 5 basis points on Friday to 6.24%.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, rose 0.59% to 90.665.

"The volatility in spot is picking up and there are doubts how long are the Fed going to keep interest rates low. Dollar is holding on to gains as rising inflation expectations in the US are keeping the yields higher and pressuring the rupee. The overall picture can be dire for rupee, as fresh concerns about a potential escalation in US-China trade tensions may come roaring back. But the rupee spot will continue to be under the bear grip until prices recover and trade above 73.25 levels, with 72.50 being the crucial support." said Rahul Gupta, Head of Research-Currency, Emkay Global Financial Services

Among Asian currencies, Indian Rupee was the biggest loser followed by South Korean Won losing 1.39%, Indonesian Rupiah declined 1.07% and Singapore Dollar fell 0.27%. However, China Offshore gained 0.17%, and Philippines Peso advanced 0.11%.

After contracting for two quarters in a row, the Indian economy grew by 0.4% in the October-December quarter amid coronavirus pandemic, official data showed on Friday. The gross domestic product (GDP) had expanded by 3.3% in the corresponding period of 2019-20, according to the data released by the National Statistical Office (NSO).

On the domestic equity market front, the 30-share BSE benchmark Sensex closed at 1939.32 points lower to close at 49,099.99, and the broader NSE Nifty was down 568.20 points to close at 14,529.15.

Foreign institutional investors have net bought $35.34 billion in equity and net sold $5.56 billion in debt since the beginning fiscal year, while domestic institutional investors have net sold Rs1.41 trillion worth of stocks, according to data on the exchanges.

(Bloomberg contributed to the story.)

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