The local currency opened at 66.7950 on Wednesday and proceeded to weaken considerably before recovering.
The rupee on Wednesday closed at 66.7200, marginally stronger than its previous close of 66.7425, after having weakened to an intraday low of 66.8650 during the session as a poll showed Republican nominee Donald Trump lead his Democratic counterpart Hillary Clinton in the US presidential race for the first time in months.
On Tuesday, a new poll by Washington Post showed that among all likely voters, 46% support Trump whereas 45% support Clinton, after the Federal Bureau of Investigation (FBI) was said to be looking to review more emails pertaining to Clinton’s private server.
The local currency opened at 66.7950 on Wednesday and proceeded to weaken considerably before recovering. The initial fall was in line with losses in local equities and other Asian currencies, whereas the recovery was due to adequate dollar supply by banks.
Dealers said that the weakness in the rupee could be primarily attributed to the uncertainty surrounding the outcome of the US presidential race. “We don’t know what is going to happen and both possible results would have very different impacts on the market. And the market does not receive this kind of confusion well. We might continue to see some weakness from time to time till the election is over,” said a dealer, who wished to remain unidentified.
The 10-year benchmark yield closed at 6.815% on Wednesday, largely unchanged from its previous close. The benchmark yield has weakened considerably from its low of 6.67% on October 5, as investors are cutting positions ahead of a possible rate hike by the US Fed in December. If the Fed decides hike rates, Indian paper would start looking less lucrative than it is now.