Re, Sensex See Worst Qtr Since Covid | India Business News – Times of India

MUMBAI: Finance minister Nirmala Sitharaman has said that the Indian currency is better placed compared to its peers and the forex markets were experiencing global spillovers. On Thursday, the rupee ended weaker for the third consecutive quarter, its worst after Q4FY20, declining by over 4% between April and June 2022.
The finance minister said, “We are relatively better placed. We are not a closed economy. We are part of the globalised world. So, we will be impacted.” Forex dealers said that the rupee has been weakening because the balance of payments position is expected to worsen. Rising interest rates in the US have triggered an exodus of portfolio investors who traditionally make up for dollar shortages arising out of the current account deficit (CAD). The CAD may widen to over 3% of the GDP because of the surge in oil prices following the Ukraine war.

Although the rupee breached 79 levels in post-market trading on Wednesday, the RBI managed to keep the local currency at 78 levels on Thursday through dollar sales. The rupee ended at 78.97, unchanged from Wednesday’s close after touching a low of 78.99. “The dollar has now surged to its strongest level in two decades. Even the Japanese yen — usually a safe-haven currency — fell precipitously against the dollar as the Bank of Japan reiterated its decision to continue with accommodative monetary policy,” the RBI said in its financial stability report (FSR).
The yield on 10-year bond ended the quarter at 7.45% as compared to 6.84% in March 2022. This 61-basis-point increase in yields would result in banks racking up huge marked-to-market losses. However, bank balance sheets would be substantially protected as the RBI has granted a dispensation earlier where bonds classified as held-to-maturity do not require provisions.