Domestic Bonds

Rupee plunges, bonds stagnate as Fed meets for near-term direction

Rupee Plunges, Bonds Little Changed; Focus on the Fed meeting


The rupiah weakened slightly against the dollar on Tuesday, while bond yields were little changed as investors awaited the outcome of the US Federal Reserve’s policy meeting on Wednesday night for near-term guidance.

The Fed signaled a 75 basis point (bps) rate hike at its July 26-27 meeting, although data from last week showed inflation hit 9.1% year-on-year in June. raised the possibility of a bigger 100 bps upside later. This year.

The partially convertible Indian rupee traded at 79.77/78 to the dollar at 0512 GMT, down from its close of 79.73 on Monday. The unit hit a high of 79.6950 during Monday trading, its highest level since July 13.

“Demand for dollars in cash appears to have moderated. The dollar/rupiah is expected to trade in a range of 79.55-79.85 during the day, with a downward bias,” analysts said. ‘IFA Global Research in a daily note.

Traders will watch domestic equities for hints on foreign fund flows, while gains in other Asian currencies should help sentiment. Domestic stocks and, however, lost 0.8% each.

After strong outflows of foreign capital every month since November, Indian equities received net inflows of $52.95 million this month through Monday. The Nifty and Sensex, meanwhile, are up around 4.5% each so far this month.

In the bond market, the benchmark 10-year bond yield was trading up 1 basis point at 7.40%, but is expected to remain in a narrow range of 3-4 basis points during the session, traders said.

U.S. Treasury yields edged higher overnight as investors awaited the Federal Reserve’s likely 75 basis point interest rate hike amid growing worries about an economic slowdown and the potential for a recession.