Mumbai: The rupee is expected to remain cautious in early morning trades awaiting weekly inflation data while firmer Asian stock markets may provide respite to foreign fund outflows. Rising prices in recent weeks have raised expectations of a rate increase in the near term which may enhance the value of rupee-denominated assets.
Annual inflation in late May is expected to come in at 8.3%, its highest in more than three years due to higher oil and food prices, a Reuters poll forecast on June 5.
The partially convertible rupee ended at 42.90/91 per dollar on June 5 off an early low of 42.9750 but still 0.3% weaker than June 4’s close of 42.77/78. It is down more than 8% so far in 2008.
Foreign funds have pulled out $4.5 billion from Indian shares this year, pulling the market down more than a fifth. In 2007, the funds had ought a record $17.4 billion and helped stocks rise 47% and the rupee gain more than 12%.