MUMBAI, Aug 24: The Indian rupee along with emerging Asian currencies weakened against the US dollar on Friday as prospects for a quick resolution of the US-China trade war faded after two days of talks ended with little progress.

Traders are waiting for a speech by Federal Reserve Chairman Jerome Powell later in the day. At 9.10am, the rupee was trading at 70.23 a dollar, down 0.15%, from its Thursday’s close of 70.11. The home currency opened at 70.20 a dollar and touched a low of 70.23.

The 10-year bond yield stood at 7.895%, from its previous close of 7.879%. Bond yields and prices move in opposite directions.

Trade talks between the US and China wrapped up on Thursday with no major progress, setting the stage for further escalation of the trade war between the world’s two largest economies. The two sides had met low expectations for this week’s meetings and no further talks had been scheduled.

Powell is due to speak at 10am New York time where analyst expects that he will keep a hawkish stance. The Fed’s most recent policy meeting minutes showed that the US central bankers are ready to raise interest rates again if the economy remains strong. That left little doubt that Chairman Jerome Powell plans to raise the benchmark lending rate next month.

“At its August meeting, the FOMC mapped out its fall agenda by signaling a change in forward guidance, deeper discussion over the balance sheet, and the risk of a “major escalation” in trade tensions—all with the backdrop of an economy with “considerable momentum” that warrants further hikes”, said Morgan Stanley in a report to its investors.

“We continue to look for two more hikes this year—in September and December. Thereafter, we look for two additional hikes in 2019, at the March and June meetings, where we expect the FOMC to rest in this hiking cycle”, Morgan Stanley report added.

Benchmark Sensex Index rose 0.28% or 107.89 points to 38,393.64. Since January, it has gained 12.6%.

So far this year, the rupee has weakened 8.9%, while foreign investors have sold $493.40 million and $5.57 billion in equity and debt markets, respectively.

Asian currencies were trading weaker. South Korean won was down 0.2%, China renminbi 0.16%, Indonesian rupiah 0.16%, Japanese yen 0.12%, Malaysian ringgit 0.11%, Taiwan dollar 0.11%, Philippines peso 0.08%. However, China Offshore was up 0.17%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.614, down 0.05% from its previous close of 95.666.

 
• mumbai
 
• INR