Indian rupee hits six and a half month low; down 16 paise

The Indian rupee has slipped further and touched a fresh six and a half month low of 65.88 against the dollar that gained clout overseas on talk of

a US rate hike and the prospect of monetary stimulus pullout.

The US Fed’s policy decision and commentary led to

foreign investors heading to the exit door in local currency market.

Today, rupee opened lower by 11 paise at 65.82 per dollar against previous close 65.71.

Mohan Shenoi of Kotak Mahindra Bank said, “Despite soft inflation, US Fed is expected to raise rates in December this year. This coupled with proposal to reduce corporate tax in US has resulted in dollar strength.”

“The rupee is also hurt by weak stock markets and rising oil prices. We expect the USD-INR pair to trade in a range of 65.50-65.80 for the day.”

“Bearishness in Indian bond market continues on the back of rising oil prices and inflation. Important trigger will also be the auction calendar for second half of this fiscal expected today.”

“The 10-year benchmark bond yield is expected to trade in a range of 6.65-6.69 percent for the day,” he added.

The dollar rose to a more than one-month high against a basket of currencies, as optimism about US fiscal reforms boosted sentiment in favour of the greenback.