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Pahalgam terror attack: Rupee, bond weaken on rising India-Pak tension
The rupee settled at 85.45 per dollar on Friday, against the previous close of Rs 85.27 per dollar. It depreciated up to 85.67 against the dollar during the day.
'The rupee opened with a gap but there is resistance around the 85 per dollar level,' said a dealer at a state-owned bank. 'There was month-end dollar demand and also caution because of what is happening in Kashmir,' he added.
The domestic unit has appreciated by 0.19 per cent in the current calendar year so far. It has witnessed 0.02 per cent appreciation in April so far.
On the other hand, the yield on the benchmark 10-year government bond inched up by 5 basis points as traders lightened their position ahead of the weekend, said dealers. Foreign banks and primary dealers sold bonds at a profit, which further aided the yields.
The benchmark yield settled at 6.36 per cent on Friday, against the previous close of 6.32 per cent. Some dealers said that the bond market was also cautious because of escalating tension in Kashmir.
'There was some profit booking, foreign banks and PDs were on the selling side, and PSU banks were on the buying side,' said a dealer at a primary dealership. 'People also lightened their positions ahead of the weekend, because of the tension between Pakistan and India as we do not know what might unfold during the weekend,' he added.
After witnessing a continuous fall in yields post the Reserve Bank of India 's Monetary Policy Committee meeting outcome, government bond yields hardened during the week due to technical resistance and outflows from the debt segment.
The total foreign portfolio investment in Indian government securities designated under the Fully Accessible Route (FAR) stood at Rs 2.96 trillion as of Friday, against Rs 3 trillion at the end of March of the current year, according to data by Clearing Corporation of India (CCIL).
Foreign investors have net sold Rs 10,234 crore worth of domestic debt in April so far, as the yield spread between the 10-year US Treasury bond and the domestic benchmark 10-year bond narrowed to 190 basis points, the lowest since October 2004.
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