Photo: Mint
Photo: Mint

Rupee up against US dollar on gains in yuan

  • Rupee closes at 71.53 a dollar, up 0.22% from Tuesday's close of 71.69
  • Traders eye the RBI monetary policy statement, due on Thursday

MUMBAI : Indian rupee on Wednesday strengthened against the US dollar tracking gains in the Chinese yuan, amid reports of US and China may still be able to close an interim trade deal.

Rupee closed at 71.53 a dollar, up 0.22% from Tuesday's close of 71.69. The Indian unit had opened 71.80 a dollar.

US President Donald Trump signalled that he would be willing to wait for another year before striking a trade agreement with China, casting doubt on the likelihood of a phase-one accord within weeks between Washington and Beijing.

Traders will eye the Reserve Bank of India’s monetary policy statement, due on Thursday. The central bank’s meeting started on Tuesday. Eight of 10 economists and treasury heads surveyed by Mint expect RBI’s monetary policy committee to cut the repo rate at which RBI lends to banks by 25 basis points (bps) to 4.9%, while maintaining an accommodative stance. Two expect the RBI to cut rates by 15 bps.

Meanwhile, rating agency S&P reaffirmed India’s sovereign credit rating with stable outlook and expects Asia’s third largest economy to grow strongly over the next two years, India’s finance ministry said citing a summary publication from the rating agency.

Economic affairs secretary Atanu Chakraborty said in a tweet late Tuesday that S&P has reaffirmed sovereign rating of India at BBB- with stable outlook. “They have stated that India’s economy continues to achieve impressive long-term growth rates despite a recent deceleration," he said in his tweet.

In the year so far, the rupee has weakened 2.46%, while foreign investors have bought nearly $12.94 billion in Indian equities and $4.59 billion in debt.

Asian currencies were trading mixed. South Korean won was down 0.63%, Thai baht 0.16%, Malaysian ringgit 0.12% and Japanese yen 0.009%. However, China offshore gained 0.22%, China renminbi 0.14%, Indonesian rupiah 0.07%, Singapore dollar 0.06%, Philippines peso 0.035%, Taiwan dollar 0.010% and Hong Kong dollar 0.008%.

The dollar index, which measures the US currency’s strength against a basket of major currencies, was at 97.719, down 0.02% from its previous close of 97.737.

The yield on the 10-year Indian government bond was at 6.467% compared with its previous close of 6.469%. The benchmark Sensex gained 0.43%, or 174.84 points, to close at 40,850.29 points. Year-to-date, it has gained 13.26%.

(Bloomberg contributed to this story.)

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