Mumbai: The Indian rupee strengthened for the third session to hit a fresh 16-month high against the US dollar ahead of the outcome of US Federal Reserve meeting due later on Wednesday.
The home currency closed at 65.69—a level last seen on 4 November 2016, up 0.19% from its previous close of 65.82. The rupee opened at 65.76 a dollar and touched a high of 65.42, a level last seen on 2 November 2015.
So far this year, the rupee has become the third-best performing currency in Asia after South Korean won and Taiwanese dollar. It gained nearly 3.4% in this period.
The Fed is expected to increase interest rates during a two-day meeting, and traders are looking for clues on how quickly the US central bank is planning to tighten monetary policy.
The benchmark Sensex index fell 0.15% or 44.52 points to closed at 29,398.11. So far this year, it has risen 11%.
Wholesale price inflation (WPI) accelerated to an over three-year high at 6.55% in February from 5.25% a month ago, while retail inflation quickened for the first time in six months to 3.65% in February from 3.17% a month ago.
Core CPI (consumer price index) eased by 20 basis points to 4.8% with important components such as health, education and housing registering slower pace of inflation.
“Going ahead, we do expect CPI to rise further in the 4-4.25% range on low base effect but the rise is expected to be very benign. While vegetable prices are likely to normalise after a steep fall, pulses prices should fall further. Also, the recent fall in crude oil prices and strengthening rupee augur well for inflation outlook,” said Edelweiss Securities in a note.
The 10-year bond yield closed at 6.829% compared to its Tuesday’s close of 6.903%. Bond yields and prices move in opposite directions.
So far this year, foreign institutional investors (FIIs) have bought $2.90 billion and $627.30 million from local equity and debt markets, respectively.
Asian currencies were trading higher. Taiwan dollar was up 0.53%, South Korean won 0.46%, Thai baht 0.21%, Singapore dollar 0.21%, China offshore 0.09%, China renminbi 0.05%, Japanese yen 0.05% and Malaysian ringgit 0.04%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 101.5, down 0.2% from its Monday’s close of 101.7..