Indian rupee gains; high retail inflation damps rate cut hopes

Tue Mar 12, 2013 5:24pm IST

Related Topics

Stocks

   

* USD/INR ends at 54.1750/1850 vs 54.41/42 on Monday

* Consumer price inflation rises 10.91 pct in Feb

* RBI likely to cut repo rate by 25 bps - Reuters poll

By Subhadip Sircar

MUMBAI, March 12 (Reuters) - The Indian 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 central bank 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

REUTERS SHOWCASE

Waning Enthusiasm

Waning Enthusiasm

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

Global Growth

Global Growth

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

Monsoon Revives

Monsoon Revives

Monsoon revival keeps rain above average   Full Article 

Wipro Results

Wipro Results

Firm sees strong sales growth, eyes Europe deals   Full Article 

Scourge of Inflation

Scourge of Inflation

Markets' post-election enthusiasm lost on consumers  Full Article 

Just Not Enough

Just Not Enough

Amazon's smartphone fails to kindle a "Fire" among reviewers.  Full Article 

Rising Market Value

Rising Market Value

Facebook goes express to mega-cap status  Full Article 

Mining Roadblock

Mining Roadblock

Coal India's plans for 20 mines hit by land, environment delays  Full Article 

Power Jolt

Power Jolt

UAE's TAQA pulls out of India power plant deal with Jaiprakash  Full Article 

Reuters India Mobile

Reuters India Mobile

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