Mumbai: The Indian rupee on Wednesday closed marginally higher against the US dollar.
The home currency ended at 64.06 a dollar, up 0.09% from its Wednesday’s close of 64.12. The rupee opened at 64 a dollar and touched a high and a low of 64 and 64.13 respectively.
The 10-year bond yield ended at 7.214%, compared to its previous close of 7.219%. In the morning trade, 10-year bond yield hit a 17-month high of 7.292% as traders viewed minutes of the Reserve Bank of India’s (RBI) latest policy as hawkish.
Most members of RBI’s rate setting committee are increasingly worried about fresh risks to inflation, with their hawkish tone suggesting that the rate cutting cycle has come to an end.
The monetary policy committee members flagged rising crude oil prices, the likelihood of a fiscal slippage and rising inflationary expectations of households as reasons to stay put on rates, show the minutes of the last meeting, released on Wednesday.
“Overall, the minutes suggest that, despite seeing upside risks to their inflation outlook, most members voted for a pause because of growth concerns. This suggests that strengthening of the growth recovery could push a few MPC members towards a tightening bias, if medium-term inflation is seen above 4%. At the next policy meeting (on 7 February), we expect the same five MPC members to vote to maintain the status quo again, but we see a risk that Ravindra Dholakia flips his vote to maintaining the status quo because of higher inflation in November and December”, said Nomura in a note to its investors.
The benchmark Sensex fell 0.06%, or 21.10 points, to 33,756.28. So far this year, it has gained 27%.
So far this year, the rupee has gained 6%, while foreign institutional investors have bought $8.14 billion and $23.22 billion in equity and debt, respectively.
Source: livemint.com