The India’s rupee fell after Federal Reserve Chair Janet Yellen failed to give strong signal on when the Federal Reserve may raise interest rates while Ukraine’s tensions rose.
The rupee tumbled 0.2 percent to trade at 60.5650 per dollar, ending a three-week run of gains. It had earlier surged to 60.3850 on Friday, the highest level since July 31.
Yellen said in her speech in Jackson Hole, Wyoming last Friday that there is still some slack in the U.S. jobs market, though the Fed may raise borrowing costs earlier than expected. Ukraine talked of boosting military spending ahead of the scheduled peace discussions with Russian President Vladimir Putin on Tuesday.
“The Fed has left the market with confused signals,” Ashtosh Raina, the head of foreign-exchange trading at HDFC Bank Ltd in Mumbai, told Bloomberg News.
The rupee’s one month implied volatility, which measures the expected swings in the exchange rate that is used to set prices to options, plunged 0.01 percentage point or one basis point, to 6.7875 percent.
Meanwhile, the Pakistani rupee slid by the biggest margin since 2009 as the conflict between Prime Minister Nawaz Sharif and the critics pressing for his resignation appeared to escalate. The currency extended its losses for the fifth consecutive day, falling 1.3 percent to 103.05 per dollar at 3:52 p.m. local time. This was the biggest decline in one day since February 2009. The rupee has declined 4.2 percent since July 1, making it Asia’s worst performer.
Sharif’s critics, led by opposition leader Imran Khan, the former national cricket team captain, have gathered outside the parliament in Islamabad. The demonstrators are calling for Sharif to resign until an investigation into claims of rigging in 2013’s election, the first democratic election in the country’s 67-year history, are finalized.To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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