The Indian rupee on Monday weakened against the US dollar after foreign institutional investors (FIIs) continued selling in debt markets. The fall in foreign exchange reserve also dampened the sentiments.

The home currency opened at 66.81 a dollar. At 2pm, the rupee was trading at 66.81 against the US dollar, down 0.15%, from its previous close of 66.72. From 3 to 13 October, FIIs sold $898.44 million in debt.

On Friday, Reserve Bank of India data showed foreign exchange reserves declined by a huge $4.343 billion to $367.646 billion in the week to 7 October, as the country gears up for a massive dollar outflow due to billions of dollars in deposits nearing their maturity. India had raised about $25 billion by way of three-year FCNR (foreign currency non-resident column) deposits in September 2013 to overcome the sharp fall in the rupee.

India’s benchmark Sensex index was trading at 27,578.97 points, down 0.34% from its previous close. So far this year, it has gained 5.6%.

India’s exports grew by 4.62% to $22.9 billion in September on the back of healthy growth in sectors such as engineering and gems and jewellery. Imports contracted by 2.54% to $31.22 billion, leaving a trade deficit of $8.33 billion in the month under review.

The benchmark 10-year government bond yield was trading at 6.754% same as that of Friday’s close of 6.754%. Bond yields and prices move in opposite directions. The rupee is down 1% till date this year, while FIIs have bought $7.57 billion in equity and sold $637.50 million in debt markets.

Asian currencies were trading lower. Malaysian ringgit 0.534%, South Korean won was down 0.490%, Taiwan dollar 0.396%, Philippines peso 0.367%, Indonesian rupiah 0.321%, Thai baht 0.15%, China Renminbi lost 0.168% and China offshore 0.166%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 98.112, up 0.09% from its previous close of 98.019.

On Friday, Federal Reserve chairwoman Janet Yellen said there are “plausible ways” that running the US economy hot could fix damage caused by the Great Recession, laying out the argument for keeping monetary policy easy without taking an interest rate hike off the table this year.

Traders are cautious ahead of the data from China, including third-quarter gross domestic product (GDP), house prices, industrial production numbers, retail sales and fixed asset investment due this week.

Sources :.livemint.com