Ahead of Federal Reserve meeting, rupee declines marginally; bond yields remain stable

26 Jul 2022 , 02:57 PM

In anticipation of the results of the U.S. Federal Reserve’s policy meeting late on Wednesday, investors watched the Indian rupee’s performance versus the dollar on Tuesday. Bond rates were barely altered.

The Fed is expected to announce a 75 basis point (bps) rate increase for its meeting on July 26—27, despite statistics released last week indicating that June’s inflation rate touched 9.1 percent year-over-year boosting the prospect of a bigger 100 bps increase later this year.

At 05:12 GMT, the partly convertible rupee of India was trading at 79.77/78 per dollar, down from its previous day’s closing of 79.73. During Monday’s trading, the price of the unit increased to 79.6950, its highest level since July 13.

Gains in other Asian currencies are anticipated to boost confidence, while traders will monitor local stocks for hints on foreign money flows. However, each domestic stock fell by 0.8%.

Indian shares have had a net inflow of $52.95 million this month as of Monday after seeing significant foreign outflows each month since November. While this is happening, the Sensex and the Nifty are each up approximately 4.5 % so far this month.

The benchmark 10-year bond yield was trading up 1 basis point at 7.40 percent on the bond market, but traders expect it to keep steady in a narrow range of 3 to 4 basis points throughout the afternoon.

In anticipation of the Federal Reserve’s anticipated 75 basis point interest rate hike amid mounting worries about an economic slowdown and the possibility of a recession, U.S. Treasury rates moved a little higher overnight.