India to address volatility in rupee against the dollar - source

BY Reuters | ECONOMIC | 07/04/22 05:51 AM EDT

NEW DELHI, July 4 (Reuters) - India is trying to "address volatility" in the Indian rupee that has tumbled to record lows against the dollar in recent weeks, a government official said on Monday, amid concerns of widening trade deficit and sell off by foreign investors.

India will try to smoothen the volatility in rupee markets, even as the country is facing "current account headwinds," due to rising commodity prices, the official, who did not want to be named, told reporters.

India's macro economic fundamentals remain strong and it will stick to the 6.4% fiscal deficit target for 2022/23 that started on April 1, the official said. (Reporting by Manoj Kumar; Editing by Toby Chopra)

In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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