Rupee reverses losses after inflation rate eases

MUMBAI Fri Dec 14, 2012 12:57pm IST

An employee arranges currency notes at a cash counter inside a bank in Agartala February 18, 2010. REUTERS/Jayanta Dey/Files

An employee arranges currency notes at a cash counter inside a bank in Agartala February 18, 2010.

Credit: Reuters/Jayanta Dey/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - The rupee recovered from early losses to trade higher on Friday after headline inflation surprised on the downside, raising hopes the central bank could start cutting interest rates as early as January.

India's wholesale price index rose a slower-than-expected 7.24 percent in November, less than the 7.6 percent estimated by a Reuters poll.

While most economists and market participants believe the central bank may hold rates steady on December 18., some are now expecting that it will infuse some liquidity in the form of a cash reserve ratio cut.

"The trending and expectation in headline inflation has improved, paving way for start of rate cut cycle in January-March 2013," said Moses Harding, head of asset liability management at IndusInd Bank.

"A CRR cut of 25 basis points is seen certain to maintain the positive feel," he said.

The government is trying to push through more reforms, approving steps on Thursday to speed up infrastructure projects and facilitate investment into the fertiliser sector.

The Sensex, which was trading flat before the data release, was up 0.4 percent.

The partially convertible rupee was at 54.32/33 per dollar at 12:30 p.m., 0.2 percent stronger than its Thursday close of 54.46/47. It had fallen to 54.60 in the session on importer demand for dollars.

The rupee is also on course for a second week of gains out of three. (Editing by Jijo Jacob)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

India-WTO Standoff

India-WTO Standoff

India threatens to derail WTO deal, prompts angry U.S. rebuke  Full Article 

Economic Pulse

Economic Pulse

New govt promises low and stable tax regime for economic revival.  Full Article 

IPO Probe Ends

IPO Probe Ends

Facebook says SEC's IPO probe ends, extending WhatsApp closing date  Full Article 

World Stocks

World Stocks

Goldman Sachs downgrades stocks to neutral for short term  Full Article 

Disappointing Results

Disappointing Results

Amazon's far-reaching ambitions, lack of profits, unnerve investors  Full Article 

Global Growth

Global Growth

IMF cuts outlook, warns of stagnation risk in rich nations  Full Article 

Market Eye

Market Eye

Nifty retreats from record highs on profit taking.  Full Article 

Waning Enthusiasm

Waning Enthusiasm

Markets' post-election enthusiasm lost on consumers.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage