The Indian rupee plunged to a record low against the dollar on Monday while the benchmark NSE Nifty 50 index fell by more than two per cent, ahead of an expected United States interest rate hike this week aimed at fighting surging inflation.
The rupee hit 78.28 per dollar for the first time as a forecast-beating US inflation report on Friday heightened prospects for a further tightening of monetary policy by the Federal Reserve. The Indian currency has been weighed down by rising oil prices, a more aggressive Fed and by capital outflows in emerging markets as foreign investors turn risk-averse.
Central banks have adopted more hawkish policies in recent months, including in India, with the Reserve Bank hiking borrowing costs by 50 basis points last week for the second time in as many months. The RBI earlier announced an out-of-cycle 0.4pc rate rise in May. India’s central bank has also been selling off foreign currency to stabilise the currency.
The benchmark 10-year bond yield was trading at 7.59pc, after touching 7.61pc, its highest since Feb 28, 2019, Reuters reported. The 10-year yield ended the day at 7.52pc on Friday. —AFP