BackRupee rises most since January to 63.6550 per dollar
The rupee gained 0.6% to close at 63.6550 a dollar, the biggest gain since 9 January
Premium
Mumbai: India’s rupee gained the most in over four months as weak US retail sales data spurred bets the Federal Reserve will delay an increase in interest rates.
Sales at retailers were little changed in April, compared with a forecast for a 0.2% gain in a Bloomberg survey of economists, official figures showed on Wednesday. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major peers, dropped for a third day. Higher US rates will reduce the allure of emerging-market assets.
The rupee gained 0.6% to close at 63.6550 a dollar in Mumbai, prices from local banks compiled by Bloomberg show. This is the biggest gain since 9 January. Indian sovereign bonds rose for the first time in three days.
“The economic data coming out of the US don’t seem to support the case for an immediate increase in rates," said Sajal Gupta, head of foreign exchange and rates at Edelweiss Securities Ltd in Mumbai. A rate increase looks more probable in December rather than previous estimates of an earlier raise, he said.
US economic indicators have missed expectations since January, according to an index by Citigroup Inc. that measures data surprises relative to market expectations, suggesting the Fed isn’t getting any closer to raising rates. The rupee plummeted to an unprecedented 68.845 to a dollar in August 2013 after the Fed’s signal to withdraw its monetary stimulus saw an exodus of funds from emerging markets.
The yield on the 8.4% Indian government notes due July 2024 fell two basis points, or 0.02 percentage point, to 7.94%, according to prices from the Reserve Bank of India’s trading system.
Since the beginning of this year, the rupee has lost 1%, while FIIs have bought $6.45 billion from local equity and $6.16 billion from bond markets.
Most of the Asian currencies closed higher against the dollar, which lost against major global currencies overnight.
South Korean won was up 0.85%, Indonesian rupiah 0.51%, Taiwan dollar 0.51%, Singapore dollar 0.5%, Malaysian ringgit 0.44%, and Philippine peso rose 0.23% against the dollar.
The dollar index, which measures the US currency’s strength against major global currencies, was trading at 93.243, down 0.4% from its previous close of 93.617.
The Sensex fell 0.17%, or 45.04 points, to close at 27,206.06 points.
Foreign institutional investors (FIIs) have sold $2.54 billion in equity markets in the last 16 out of 18 sessions. In May so far, FIIs have sold $1.29 billion in debt and $761.38 million in equity.
India’s wholesale price inflation contracted further in April by 2.65% after shrinking 2.33% in the previous month, raising chances of a interest rate cut by the central bank in its policy review on 2 June.
Mint’s Ravindra Sonavane contributed to this story.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
