Rupee hits 5-week low, yields drop

MUMBAI Rupee ended weaker on Friday after tumbling to its lowest in five weeks as local equities slumped, tracking the global equity selloff on concerns of a slowdown in the global economy, stoking fears of foreign fund outflows.

Week-on-week, the local currency has weakened nearly 1.2%. The partially convertible rupee ended at 44.7350/7400 per dollar, 0.4% weaker from Thursday’s close of 44.545/555. It earlier touched 44.8550 — its lowest since June 29.

The 10-year bonds rose, driving yields down this week by the most since June, as investors sought the relative safety of government debt. The notes climbed as the finance ministry sold Rs 12,000 crore of bonds, maturing in 2017, 2022 and 2027.

The BSE Sensitive Index of shares has dropped almost 6% in four days after reports this week showed manufacturing in the US and China cooled and consumers in the world’s largest economy cut spending. “RBI may need to temper the pace of tightening, keeping in view the domestic and global scenario,” said Pradeep Madhav, MD, Securities Trading.