Rupee closes higher against US dollar
Mumbai: The Indian rupee closed stronger against US dollar on Wednesday, tracking gains in its Asian peers.
The home currency closed at 63.59 a dollar, up 0.19% from its Tuesday’s close of 63.72. The rupee opened 63.66, and fell to 63.84 a dollar, or 0.19% down, during the day on worries of fiscal slippage and higher inflation pressure after international crude oil prices hit a three-year high.
Asian currencies were trading higher as dollar weakened after a report that Chinese officials have recommended slowing or halting purchases of Treasuries, fuelling expectations that the world’s largest foreign-exchange reserves holder may favour a shift toward other currencies, Bloomberg reported.
Japanese yen was up 1.14%, Thai Baht 0.54%, China renminbi 0.36%, Singapore dollar 0.32%, China Offshore 0.27%, Malaysian ringgit 0.12%, Indonesian rupiah 0.1%. However, South Korean won was down 0.44%, Taiwan dollar 0.17%, Philippines peso 0.12%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 92.036, down 0.5% from its previous close of 92.528.
The sentiments were also upbeat on the hopes of more inflows from foreign investors after the government allowed foreign direct investment across several sectors.
The cabinet allowed foreign airlines to invest up to 49% in Air India through government approval route ahead of its proposed privatization. It also approved 100% foreign direct investment in single-brand retail through automatic route. It also tweaked the local sourcing norm by allowing such entities to meet the mandatory 30% local sourcing norm incrementally within a period of five years of opening their first store in India.
The government eased rules to lure foreign investors to revive economic growth that seen expanding slowest pace since 2014. On Friday, the government forecast economic growth slowing to 6.5% in the year to 31 March from 7.1% in the previous year.
The forecast released by the Central Statistics Office assumes that the economy is on a recovery path. The economy grew at 6% in the six months ended 30 September, indicating that it will accelerate to 7% in the second half ending 31 March, if the forecast is to come true.
The 10-year bond yield ended at 7.26% compared to its previous close of 7.37%. Bond yields and prices move in opposite directions.
Traders are cautious ahead of the Index of Industrial Production (IIP) data for November and Consumer Price Index (CPI) data for December on 12 January. According to Bloomberg analysts’ estimates, IIP will be at 4% in November from 2.2% a month ago, while CPI will be at 5.04% in December from 4.88% a month ago.
In the year 2017, the rupee gained 6.35% and Sensex rose 28%, while foreign institutional investors have bought $7.73 billion and $23.27 billion in equity and debt, respectively.