Rupee strengthens against US dollar ahead of Fed decision
Mumbai: The Indian rupee strengthened against the US dollar, ahead of the US Federal Reserve’s policy decision on Wednesday.
At 1.55pm, the rupee was trading at 64.27 a dollar, up 0.11% from its Tuesday’s close of 64.34. The rupee opened at 64.34 a dollar and touched a high and a low of 64.26 and 64.37, respectively.
Analyst expects that fed likely to raise its benchmark interest rate for the second time this year. Policy makers in Japan, Switzerland and Britain are also scheduled to weigh decisions this week.
Bond yield fell to a fresh four-month low after both consumer-based and wholesale inflation fell more than analysts expected, boosting sentiments that the Reserve Bank of India (RBI) may cut interest rates in its August policy. However, some analysts expected that RBI will cut rates before its next policy.
India’s wholesale inflation eased to 2.17% in May from 3.85% in the previous month because of a fall in the prices of primary food items, fuel and minerals. Retail inflation, as measured by the consumer price index (CPI) slowed to 2.18% in May from 2.99% a month ago as food prices fell from their year-ago level.
The 10-year bond yield was at 6.485% compared to its previous close of 6.494%. Bond yields and prices move in opposite directions.
The benchmark Sensex index gained 0.08% or 28.27 points to 31,131.86. So far this year, it has risen 16.98%.
So far this year, the rupee has gained 5.61%, while foreign investors bought $7.67 billion and $12.91 billion in local equity and debt markets, respectively.
Asian currencies were trading higher. South Korean won was up 0.39%, Philippines peso 0.11%, Singapore dollar 0.05% and Taiwan dollar 0.05%. However, Japanese yen was down 0.12%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 96.985, up 0.01% from its previous close of 96.975.