Rupee nears 72; Sensex slides again

Dollar strengthens against all emerging market currencies; bond yields at 8.05%

The rupee fell for the sixth straight session on Wednesday, ending at 71.76 to a dollar after touching 71.97 intraday — a record low — that prompted the central bank to intervene in the currency market to arrest the fall.

On Tuesday, the rupee ended at 71.58 to the dollar, which was an all-time low. On Wednesday, the currency closed 18 paise, or 0.24%, lower than its previous close.

According to currency dealers, State-run banks spotted selling of the dollar on behalf of RBI when the currency neared the 72 mark, which helped the rupee cut some losses.

A combination of factors such as rising crude oil prices, which could widen the current account gap, strengthening of the dollar against all emerging market currencies, and bearish sentiments in equity markets also accentuated the fall.

The rupee, which has fallen close to 12% this year, is the worst-performing currency in Asia.

Bond yields also inched up to 8.11% intraday as there was speculation that the fall in the rupee could prompt the RBI to tighten interest rates further. Since June, the central bank has hiked the key policy rate or the repo rate in two policy review meetings, by 25 basis points each, due to inflation concerns. The yield on the 10-year government bond cooled down later in the day, ending 1 bps lower than its previous close at 8.05%.

Investor sentiment remained subdued in the equity markets with the Sensex shedding more than 380 points during the day to touch a low of 37,774.42. The index, however, recovered closed at 38,018.31, lower by 139.61 points, or 0.37%.

Six-session losing streak

The last six trading sessions have seen the Sensex lose nearly 880 points after touching a high of 38,896.63 on August 28.

The broader Nifty closed at 11,476.95, down 43.35 points, or 0.38%, on Wednesday.

The overall market breadth remained very weak for the second consecutive session with nearly 1,800 stocks losing ground on BSE, as against only 981 gainers.

On Tuesday, more than 2,000 stocks had declined when the Sensex had lost 155 points.