Rupee opens marginally higher against US dollar

Mumbai: The Indian rupee on Friday was trading marginally higher against US dollar, tracking gains in its Asian peers.

The rupee opened at 64.07 a dollar. At 9.15am, the home currency was trading at 64.03 a dollar, up 0.08% from its Thursday’s close of 64.08.

The currency is set to appreciate the first time this year after depreciation in six consecutive years due to continued inflows from local and foreign investors on hopes of more reforms from Narendra Modi’s Bharatiya Janata Party (BJP) government.

So far this year, the rupee has gained 6%, while foreign institutional investors have bought $7.73 billion and $23 billion in equity and debt, respectively.

“In fourth quarter of fiscal year 2018 we expect INR to appreciate on seasonal factors, greater tolerance for Rupee appreciation in line with other EM currencies and limited RBI intervention to stem inflationary pressure. From the medium term perspective, we believe that India’s macro backdrop (ex growth) is worsening on the margin. Any pickup in crude prices will further accentuate the problem. Overall we expect INR to trade in the range of 64-66 with the March FY 2019 level of 65 in FY2019,” said ICICI Bank Global Markets, in a report to its investors.

The 10-year bond yield rose further to hit a fresh 17-month high. The 10-year bond yield was at 7.402%, a level last seen on July 2016, compared to its previous close of 7.396%. Bond yields and prices move in opposite directions.

Bond prices headed for its worst year since 2009 due to worries that the government may miss its fiscal deficit target and higher inflation due to a continued rise in the international crude oil prices. On Wednesday, the government announced an additional Rs50,000 crore borrowing following a slide in goods and services tax receipts. So far this year bond yield has gained over 88 basis points.

The benchmark Sensex rose 0.14%, or 46.11 points, to 33,894.14. So far this year, it has gained 28%.

Asian currencies were trading higher. Taiwan dollar was up 0.43%, South Korean won 0.28%, China renminbi 0.27%, China offshore 0.16%, Malaysian ringgit 0.11%, Japanese yen 0.1%, Singapore dollar 0.08% and Indonesian rupiah rose 0.06%. However, Philippines peso was down 0.15%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 92.607, up 0.01%, from its previous close of 92.602.