The Indian rupee hovered around 96.0 per dollar on Thursday, extending losses for a third consecutive session as a stronger dollar and rising US Treasury yields weighed on Asian currencies, while likely RBI intervention limited the decline. The dollar index climbed to a more than three-month high as US Treasury yields continued to rise despite softer-than-expected August inflation data. Asian currencies also weakened, while markets continued to price in further Fed tightening, with one rate hike fully priced by December. State-run banks were seen selling dollars, likely on behalf of the RBI, helping keep the rupee above the 96 per dollar level. Elevated oil prices also added to pressure, with Brent crude rising nearly 2% on Wednesday amid stalled US-Iran talks and tightening fuel markets, extending its September rally to about 14%. Markets will be closed on Friday in observance of Mahatma Gandhi Jayanti, with trading resuming on October.
India’s BSE Sensex fell further to close about 0.8% down at 71,909.7 on Thursday, a new low since March, marking the fourth straight session of losses. Rising oil prices and continued foreign investor outflows continued to dampen investor sentiment. Uncertainty over a diplomatic resolution to the Middle East conflict has compounded concerns about persistent inflationary pressures, while also raising fears of higher interest rates. Meanwhile, caution prevailed ahead of the RBI’s policy decision, scheduled for October 7 .All sectors posted losses, with tech and select banks bucking the trend. Maruti (-4.6%), M&M (-3.3%), Tata Steel (-3%), Adani Ports (-2.7%), ITC (-2.6%) and Power Grid (-2.2%) were the biggest laggards. On the upside, Infosys (4%), TCS (1.4%), HCL Tech (1.4%) and HDFC Bank (1.4%) advanced firmly.
