The Indian rupee weakened further against the dollar in early trades on Wednesday, 25 April 2018 due to appreciation of the greenback amid rising US bond yields and surge in global crude oil prices. Also, a lower opening in the domestic equity market too weighed on the investor sentiment. Increased demand for the US currency from importers due to month-end demand and sustained foreign capital outflows also pressured rupee lower.
The domestic currency opened at Rs 66.4850 against the dollar and dropped to a low of 66.7025 so far during the day. In the spot currency market, the Indian unit was last seen trading at 66.6500. Yesterday, rupee recovered by 10 paise to 66.38 against the US dollar due to fresh selling of the American currency by exporters and banks.
Domestic benchmark indices were trading lower in early trade due to weak global cues. At 9:20 IST, the barometer index, the S&P BSE Sensex, was down 16.92 points or 0.05% at 34,599.72. The Nifty 50 index was down 13.35 points or 0.13% at 10,601.
Overseas, Asian shares fell across the board, following an overnight drop in US stocks. Rising US bond yields also worried investors. US stocks tumbled overnight, led by a selloff in industrials, materials and technology shares. The selling pressure came after the 10-year Treasury yield briefly touched the psychologically important 3% level for the first time in four years. Caterpillar, an industrial heavyweight, beat earnings estimates due to strong global demand but its shares slumped after management warned their results could cool in the near term.
Meanwhile, the dollar inched up on Wednesday, approaching its recent four-month high as the U.S. 10-year bond yield poked above 3 percent to hit its highest level since early 2014. The dollar index against a basket of six major currencies (DXY) rose 0.1 percent to 90.844. It had climbed overnight to 91.016, highest since Jan. 12, before a slide in Wall Street stocks tempered investor risk appetite and slowed the greenbacks rally against its peers, notably the yen. The greenback had risen without pause through much of the past week as U.S.-China trade conflict woes receded and allowed the market to turn its attention back to dollar-supportive fundamentals, notably the surge by U.S. yields.