Rupee gains; retail inflation dampens rate cut hopes

MUMBAI Tue Mar 12, 2013 5:30pm IST

A teller counts currency notes at a bank branch in Mumbai, January 24, 2013. REUTERS/Vivek Prakash/Files

A teller counts currency notes at a bank branch in Mumbai, January 24, 2013.

Credit: Reuters/Vivek Prakash/Files

Related Topics

Stocks

   

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)

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

Diplomacy

REUTERS SHOWCASE

Maruti Results

Maruti Results

Maruti Suzuki says profits helped by sentiment, not growth.  Full Article 

Tracking the Monsoon

Tracking the Monsoon

Monsoon turns patchy after revival.  Full Article 

ICICI Profit Up

ICICI Profit Up

ICICI Bank Q1 net profit up 17 percent, beats estimates.  Full Article 

Pharma Sector

Pharma Sector

FDA raises concern over drug production process at Cadila  Full Article 

Coal India

Coal India

Some Coal India mines may be run by foreign firms - minister  Full Article 

Fuel Prices

Fuel Prices

IOC to cut petrol prices by 1.5 pct from Friday  Read 

Economic Pulse

Economic Pulse

India's infrastructure output growth hits 9-month high in June  Full Article | Related Story 

Joint Bid

Joint Bid

ONGC, Oil India bid $1.5 bln for stake in Murphy Oil's Malaysia assets - sources  Full Article 

Reuters India Mobile

Reuters India Mobile

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