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Rupee hits fresh 16-month high against US dollar

LiveMint logoLiveMint 15-03-2017 Ravindra N. Sonavane

Mumbai: The Indian rupee strengthened for the third session to hit a fresh 16-month high against the US dollar ahead of the outcome of US Federal Reserve meeting due later on Wednesday.

The rupee opened at 65.76 a dollar and touched a high of 65.74, a level last seen on 6 November 2015. At 9.15am, the home currency was trading at 65.76, up 0.11% from its previous close of 65.82.

So far this year, the rupee has become the third-best performing currency in Asia after South Korean won and Taiwanese dollar. It gained nearly 3.3% in this period.

The Fed is expected to increase interest rates during a two-day meeting, and traders are looking for clues on how quickly the US central bank is planning to tighten monetary policy.

The benchmark Sensex index rose 0.09% or 26.45 points to 29,469.08. So far this year, it has risen 11%.

Wholesale price inflation (WPI) accelerated to an over three-year high at 6.55% in February from 5.25% a month ago, while retail inflation quickened for the first time in six months to 3.65% in February from 3.17% a month ago.

Core CPI (consumer price index) eased by 20 basis points to 4.8% with important components, such as health, education and housing registering slower pace of inflation.

“Going ahead, we do expect CPI to rise further in the 4-4.25% range on low base effect but the rise is expected to be very benign. While vegetable prices are likely to normalise after a steep fall, pulses prices should fall further. Also, the recent fall in crude oil prices and strengthening rupee augur well for inflation outlook,” said Edelweiss Securities in a note.

The 10-year bond yield was trading at 6.894% compared to its Tuesday’s close of 6.903%. Bond yields and prices move in opposite directions.

So far this year, foreign institutional investors (FIIs) have bought $2.90 billion and $627.30 million from local equity and debt markets, respectively.

Asian currencies were trading marginally lower. Taiwan dollar was up 0.23%, Thai baht 0.13%, South Korean won 0.12%, Philippine peso 0.06% and Singapore dollar 0.06%. However, Japanese yen was down 0.07%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 101.67, down 0.03% from its Monday’s close of 101.7.

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