rupee rebounded from its record closing low and opened 13 paise higher at 83.02 against the US dollar amid a pullback in the American currency. “The depreciation in rupee comes on the back of the recent spike in US dollar and treasury yields amid worries that the US Federal Reserve will keep interest rates elevated for a longer duration. The fall in Chinese yuan led to a slide in domestic currency on concerns over export competitiveness," said Amit Sajeja, Vice President Research - Commodities & Currencies at Motilal Oswal.
Sajeja believes the near term outlook for rupee remains negative, but the pace of depreciation may be smaller as RBI will keep supporting the local currency at lower levels. Let us dive deeper into the key reasons behind the recent depreciation in rupee: The US dollar was set for a fifth winning week against its major peers, making it the longest winning streak for 15 months. It touched a two-month high of 103.59 overnight.
Though the US dollar index - which measures the currency against six developed-market rivals, including the yen and euro - eased 0.02% to 103.38 on Friday, it is set to gain 0.5% for the week. The 10-year US Treasury yield was at 4.25%. It hit a 10-month peak of 4.32% on Thursday.
The economic data released recently indicate that the economy continues to be resilient. This is likely to keep US yields elevated. On the domestic front, Indian benchmark 7.26% 2033 bond yield was trading at 7.23% after hitting a more than four-month high of 7.26% on Thursday.
Read here: US treasury yields widen as Fed minutes raise rate hike worries A fall in China's yuan also weighed on the local rupee. The yuan has depreciated 0.6% this week and 5.3% this year. Concerns about a growing debt crisis in
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