BackRupee breaks 60 mark against dollar as inflation spikes
The rupee closed at 60.17 per dollar on Monday, down 0.65% from its previous close
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Mumbai: The rupee ended at 60.17 per dollar on Monday, down 0.65% from its previous close, as dealers sold the Indian currency after official data showed an increase wholesale prices in May.
Concerns over high oil prices after increased violence in Iraq over the last one week had also lead to higher dollar demand.
The government on Monday said the wholesale price index (WPI) rose 6.01% in May, the fastest pace since December, from 5.2% in April.
After the inflation data, rupee touched a low of 60.23, a level last seen on 13 May.
The rise in wholesale prices was higher than analysts expectations; analysts had estimated the WPI to rise 5.4% in May. The rupee fell to a low of 60.23, a level last seen on 5 May, after the inflation data.
“Higher inflation means that the RBI (Reserve Bank of India) will have to focus on inflation rather than growth which in turn means that a rate cut is unlikely at least in the short term," said a dealer with a foreign bank.
India’s equity benchmark Sensex ended at 25,190.48 points on Monday, down 0.15%.
The yield on India’s 10-year benchmark bond ended at 8.648%, compared with its Friday’s close of 8.593%. Bond yields and prices move in opposite directions.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 80.602, up 0.03% from its previous close of 80.576.
Since the beginning of this year, the rupee has gained 2.72% against the dollar, while foreign institutional investors have bought $9.73 billion from local equity markets.
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