Rupee drops below 75 on rising crude oil, bond yields surge
MUMBAI: The rupee breached the 75 level to close 37 paise lower against the dollar at 75.36 on Monday on high crude prices. The higher price of dollar and oil triggered inflation fears pushing up yields on the 10-year government bond to a high of 6.34% the highest in 18 months.
The rupee came under combined pressure as crude oil moved to a seven-year high and the dollar gained against major currencies in global markets on expectations that the US Federal Reserve will taper bond-buybacks to reduce liquidity. Bond yields rose because of fears of higher inflation coupled with RBI’s announcement that there may not be need for additional purchases under its government securities acquisition program.
