Rupee opens lower against US dollar ahead of budget 2018

Mumbai: The Indian rupee on Thursday weakened against US dollar ahead of the announcement of the Union budget for fiscal 2018-19.

The local currency opened at 63.70 a dollar. At 9.15am, the home currency was trading at 63.68, down 0.13% from its previous close of 63.59.

India’s benchmark Sensex index rose 0.37% or 131.70 points to 36,096.72. So far this year, Sensex has risen 5%.

India’s 10-year bond yield was at 7.44% from its Wednesday’s close of 7.43%. Bond yields and prices move in opposite directions.

All eyes will be on what the government projects it’s fiscal deficit to be for fiscal 2017-18, borrowing programme and announcements surrounding banking and infrastructure reforms.

Some analysts expect the government to stick to a fiscal deficit target of 3% for 2018-19, while others say that the fiscal deficit target may be higher due to recent surge in international crude oil prices and lower-than-expected collections of goods and services tax (GST).

Brokerage firm Nomura Research and DBS Bank Ltd expects the deficit targets for FY18 and FY19 to be raised to 3.5% and 3.2% respectively. According to Bloomberg analysts estimate, the government will set borrowing target at Rs6.5 trillion for next fiscal compared to Rs6.05 trillion current fiscal year.

Since the beginning of this year, the rupee has gained 0.45%, while foreign institutional investors have bought $2.08 billion from local equity and $1.35 billion in debt markets.

Most Asian currencies were trading lower. Malaysian ringgit was down 0.44%, South Korean won 0.39%, Philippines peso 0.32%, Indonesian rupiah 0.14%, Japanese yen 0.14%, China renminbi 0.1%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 89.12, down 0.02% from its previous close of 89.133.