The Indian rupee strengthened past the 62-per-dollar mark, while the 10-year bond yield fell 11 basis points in opening trade on Thursday after Reserve Bank of India (RBI) unexpectedly cut the repurchase rate with immediate effect. One basis point is one-hundredth of a percentage point.
The local currency opened at 61.89 per dollar and touched a high of 61.72, a level last seen on 24 November 2014. At 10.02am, the rupee was trading at 61.79 per dollar, up 0.65% from its previous close of 62.19.
RBI cuts its benchmark repo rate by 25 basis points to 7.75%, citing easing inflationary pressures. RBI said inflationary pressures have been easing since July and the path of inflation has been below the expected trajectory. India’s benchmark Sensex was trading at 27,834.64 points, up 1.8% or 487.82 points.
Most of the Asian currencies were trading mixed against the dollar. The Malaysian ringgit was up 0.57%, Taiwanese dollar 0.11%, Singaporean dollar 0.05%. However, Japanese yen was down 0.34%, Indonesian rupiah 0.14%, Chinese offshore 0.06% and South Korean won 0.06%.
The yield on India’s 10-year benchmark bond stood at 7.67%, a level last seen on 15 July 2013, compared with its Wednesday’s close of 7.77%. Bond yields and prices move in opposite directions.
Lower-than-expected inflation has been enabled by lower global crude oil prices, weaker demand conditions globally and locally and the government’s commitment towards fiscal consolidation, RBI said.
India’s Consumer Price Index (CPI) data released on Monday had shown that retail inflation fell to 5%, while Wholesale Price Index (WPI) data released on Wednesday showed an expansion of just 0.1%.
Since the beginning of the 2015, the rupee has strengthen 1.94% against the dollar, the best performer in Asian currencies market, while foreign institutional investors have sold $311.6 million from local equity markets and bought $955.9 million from the debt market.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 92.151, down 0.01% from its previous close of 92.161.
Source:livemint.com
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