Mumbai: The Indian rupee and bond prices fell for a fourth straight session as traders await key consumer price inflation data due after 5.30pm on Monday after wholesale price inflation unexpectedly quickened. The rupee closed at a fresh 15-month low, while the 10-year bond yield hit a 27-month high.
The home currency closed at 67.52 against US dollar, down 0.27% from its previous close of 67.32. The currency opened at 66.17 a dollar and touched a low of 67.63—a level last seen on 31 January 2017.
The 10-year bond yield ended at 7.825%—a level last seen on 25 February 2016, up 10 basis points from its previous close of 7.727%. Bond yields and prices move in opposite directions.
According to government data, the wholesale price index (WPI)-based inflation shot up 3.18% in April from a year ago higher than 2.9% median estimate in a Bloomberg survey of 28 economists. The WPI inflation stood at 2.47% in March and 3.85% in April last year.
The government will announce consumer price inflation after 5.30pm. According to Bloomberg analyst estimates, CPI will be at 4.45% for April from 4.28% a month ago.
Traders fears that government may not be able to stick to its fiscal deficit target for this fiscal due surge in crude oil prices and expectations that it may adopt populist measures due to general election.
“Farm distress has become a political issue and the rural-urban stratification of the Karnataka vote will be important. In the December Gujarat elections, BJP managed to retain its mandate but suffered heavy losses in its rural constituencies. Not surprisingly, the BJP government has promised farm loan waivers in Karnataka in its manifesto. In the run up to other state and general elections, we expect government policies to remained focussed on improving rural incomes" says Nomura Global Research in a note to its investors.
Traders also awaiting Karnataka elections final results on Tuesday. Exit polls released over the weekend showed Bharatiya Janata Party emerging as a single largest party in Karnataka elections.
According to exit polls, BJP set to win between 95 to 120 seats in the 224-member Karnataka assembly. Congress is seen getting 72 to 99 seats.
So far this year, rupee weakened over 5.2% while foreign investors have bought $717 million and sold $2.87 billion in equity and debt markets, respectively.
Benchmark Sensex Index rose 0.06% or 20.92 points to 35556.71. Since start of January, it gained 3.5%.