Rupee closes 1-month low ahead of inflation data next week
Mumbai: The Indian rupee on Friday weakened to one-month low against the US dollar, while bond yields rose to a fresh six-month high ahead of the key inflation data due next week.
The home currency closed at 65.17 against the dollar—a level last seen on 10 October, down 0.35% from its Thursday’s close of 64.94. The rupee opened at 65.07 a dollar and touched a low of 65.20 a dollar. For the week, it declined 0.95%, its biggest weekly drop since 22 September.
The 10-year bond yield ended at 6.956% compared to its previous close of 6.931%. Bond yields and prices move in opposite directions.
The government will issue consumer price and wholesale price based inflation data for October on 13 November and 14 November respectively. According to Bloomberg analyst estimates, Consumer Price Index expected to be at 3.4% from 3.28% a month ago while Wholesale Price Index will be at 3.01% versus 2.6% a month ago.
Traders are cautious after Reuters poll showed that retail inflation is forecast to have sped up to a seven-month high in October, led by a rebound in food prices as unexpected rains destroyed crops, diminishing the chances of further interest rate cuts.
The government will also issue Index of Industrial Production data for September on 10 November and Bloomberg analysts expect that it will be at 3.8% from 4.3% a month ago.
The benchmark Sensex index rose 0.19% or 63.63 points to closed at 33,314.56 points. So far this year, it has gained 24.76%.
So far this year, the rupee has gained 4.3%, while foreign institutional investors have bought $7.41 billion and $22.63 billion in equity and debt, respectively.
Asian currencies were trading little changed as uncertainty about the progress of US tax cuts. Malaysian ringgit was up 0.28%, Japanese yen 0.08%, Thai baht 0.06%, Taiwan dollar 0.04%, China offshore 0.04%. However, South Korean won was down 0.12%, Singapore dollar 0.04%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.494, up 0.05% from its previous close of 94.444.