Rupee gains; retail inflation dampens rate cut hopes
MUMBAI (Reuters) - The rupee rose on Tuesday helped by foreign fund inflows, but gains were kept in check as some traders scaled back hopes of a rate cut by the RBI after consumer price inflation showed a spike and factory output rose more than expected.
India's annual consumer price inflation inched up to 10.91 percent in February from 10.79 percent a month ago, data released on Tuesday showed.
Separately, India's industrial output expanded for the first time in three months in January, growing more than estimated, and showing some signs of recovery in economic growth.
The rupee tumbled from the day's high as some dealers trimmed hopes of a rate cut with data showing retail inflation continued to remain stubbornly high, while the economy showed some traction.
"Some traders who had gone short dollars saw stop-losses getting triggered after the IIP and CPI data. But some selling by foreign banks kept rupee losses in check," said Sudarshan Bhat, chief forex dealer at Corporation Bank in Mumbai.
The partially convertible rupee closed at 54.1750/1850 per dollar versus its previous close of 54.41/42, a fourth day of gains out of five. It traded in a 54.17-54.40 band in session.
However, most economists who participated in a Reuters poll still expect the RBI to cut rates by 25 basis points on March 19.
The rupee may find some support from the government's stake sale in National Aluminium Co this week, which is expected to fetch about $260 million.
In the offshore non-deliverable forwards, the one-month contract was at 54.60, while the three-month was at 55.20.
In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 54.37 with a total traded volume of $5.6 billion.
(Editing by Jijo Jacob)
- Tweet this
- Share this
- Digg this
- India approves $2.6 bln mounted gun purchase - official
- 'Hunger Games' tops U.S. box office with $123 million opening
- Computer spying malware uncovered with 'stealth' features - Symantec
- Celebrity song to aid fight against Africa Ebola crisis tops UK charts
- Multi-national crew blasts off for space station
India approved on Saturday the purchase of 814 mounted gun systems for the army at a cost of 157.5 billion rupees ($2.55 billion), a defence ministry spokesman said. Full Article