Dubai: Indian rupee fell to 66.47 levels against US dollar on Monday morning as market began to digest implications of the defeat of Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP)-led National Democratic Alliance in the Bihar State.
The rupee was trading around 18.07 against the UAE dirham at mid-day.
Stocks and bonds too retreated on concern that the BJP’s defeat in the country’s third-most-populous state will hamper Modi’s ability to push through policy reforms to strengthen the economy
Last week had seen significant sell-offs from foreign portfolio investors to the tune of $548 million in a matter of six days.
The S&P BSE Sensex index dropped 1.2 per cent, headed for its biggest loss since September 22. The benchmark 7.72 per cent yielding bond maturing in 2025 touched 7.74 per cent by mid-day losing all the gains it had made post the Reserve Bank of India’s September 29 monetary policy when the repo rate was cut by 50 basis points.
The rupee declined 0.9 percent to 66.3475 a dollar as of 12:13 p.m. in Mumbai, prices from local banks compiled by Bloomberg show. Analysts say Tough times for the Indian currency may not be over yet even as the US Federal Reserve is planning to hike its interest rates this year which may turn out to be another dampener for the rupee.