India’s rupee fell to a five-month low, dropping to 61.70 to a dollar, as foreign funds continued to sell their stocks and fresh concerns emerged on the situation in Iraq. Three-month offshore non-deliverable forwards fell 0.7 % to 62.75 per dollar today. According to the RBI’s trading system the yield on government bonds due 2024 rose 15 basis points from Aug 1st and four basis points to 8.67 % in Mumbai.
The rupee recovered a bit to 61.61 but the sentiments remained weak for the Indian currency, with traders hoping for some intervention by the central bank. The rupee yesterday registered one of the steepest gains in the past month.
After the recovery the rupee dropped 0.7 % to 61.6850 per dollar as of morning in Mumbai. It touched 61.7388 earlier, the weakest level since March 5. The currency fell 0.8 % this week. Brent crude prices are up 1.6 % this week, the most in two months, as the violence in Iraq fans concern that supplies will be disrupted.
Market experts say that there’s risk aversion being seen on account of the escalating geopolitical tensions. Indian assets could witness some selling pressure in the short-term.