The Indian rupee on Wednesday strengthened past the 64 mark against the dollar, tracking the gains in the local equity markets. The home currency closed at 64.01, up 0.25% from its previous close of 64.17. The local unit opened at 64.18 per dollar and touched a high of 63.94 a dollar.
The Sensex rose 1.39%, or 373.62 points, to close at 27,251.10 points. The local markets had fallen at least 600 points on Tuesday.
India is among the most over-owned markets in Asia at a time when earnings growth is slowing and room for rate cuts is limited, said HSBC Global Research in its latest India strategy report released on Thursday. Citing these concerns, HSBC has cut India’s ratings to underweight from overweight.
Foreign institutional investors (FIIs) have sold $2.34 billion in equity markets in the last 15 out of 17 sessions, except on 21 April and 11 May when FIIs bought $2.6 billion and $49.07 million, respectively. In May so far, FIIs have sold $980.94 million in debt and $557.29 million in equity.
India’s factory output touched a five-month low in March and inflation eased to a four-month low in April, providing the right context for a possible rate cut by the Reserve Bank of India in its monetary policy review on 2 June.
Growth in the index of industrial production (IIP) slowed to 2.1% in March from 4.9% a month ago because of an across-the-board slowdown in production, while the Consumer Price Index-based retail inflation eased to 4.87% in April from 5.25% a month ago with slower gains in vegetable prices, government data showed.
The yield on India’s 10-year benchmark bond closed at 7.956% compared with its Tuesday’s close of 7.949%. Bond yields and prices move in opposite directions.
Since the beginning of this year, the rupee has lost 1.5%, while FIIs have bought $6.65 billion from local equity and $6.47 billion from bond markets.
Most of the Asian currencies closed higher. Malaysian ringgit was up 0.54%, Indonesian rupiah 0.54%, Thai baht 0.45%, Singapore dollar 0.39%, Philippines peso 0.17%, Japanese yen rose 0.13%, Taiwan dollar 0.11%, while China offshore and China renminbi were up 0.08% each. However, South Korean won was down 0.35%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.46, down 0.08% from its previous close of 94.534.
Source:livemint.com
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