Mumbai: The Indian rupee on Tuesday strengthened marginally against the US dollar, tracking the gains in the local equity markets.
Traders are cautious ahead of the gross domestic product (GDP) data for the June quarter and fiscal deficit data for July on Wednesday. According to Bloomberg analyst estimates, GDP may be at 7.5% compared with 7.9% in the March quarter.
The rupee opened at 67.12 per dollar. At 9.12am, the home currency was trading at 67.11 per dollar, up 0.1% from its previous close of 67.18.
India’s benchmark Sensex index rose 0.41% or 113.85 points to 28,016.51. So far this year, it has gained 7%.
The economy’s prospects for the current financial year are brighter than the previous fiscal year, but growth is still below potential, wrote Reserve Bank of India (RBI) governor Raghuram Rajan in his foreword to the central bank’s annual report for 2015-16. A week before he hands over charge to Urjit Patel, Rajan listed economic growth, curbing inflation and ensuring that banks focus on rate cut transmission and balance sheet clean up as the key “work in progress” areas for the central bank, Mint reported.
The 10-year bond yield was trading at 7.122%, compared with its Monday’s close of 7.123%. Bond yields and prices move in opposite directions.
The rupee is down 1.4% till date this year, while foreign institutional investors (FIIs) have bought $5.78 billion in equity and sold $1.19 billion in debt markets.
Asian currencies were trading mixed ahead of US Federal Reserve vice-chairman Fischer’s Bloomberg TV interview. South Korean won was up 0.51%, Taiwan dollar 0.15%, Indonesian rupiah 0.11% and China renminbi 0.08%. However, Japanese yen was down 0.22%, Malaysian ringgit 0.11% and Singapore dollar 0.05%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.598, up 0.04% from its previous close of 95.566.
The US Commerce Department said that consumer spending, which accounts for more than two-thirds of US economic activity, rose 0.3% last month after a 0.5% gain in June. On Friday, Fed chair Janet Yellen said the case for a rate hike before the end of the year was strengthening, Vice-chair Stanley Fischer seemed to indicate not only the possibility of a tightening move in September but a second one in December, Reuters reported.
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