The Indian rupee depreciated against the dollar in early trades on Wednesday, 13 June 2018 due to increased demand for the American currency from importers amid foreign fund outflows and rising retail inflation. Dollar strengthening against other currencies overseas as investors await a key Federal Reserve decision later in the day also weighed on the rupee sentiment. However, a higher opening in the domestic stock market limited the rupees losses.
The domestic currency fell 13 paise to 67.62 in opening trades against the US dollar today. The currency rebounded to a high of 67.5475 so far during the day. In the spot currency market, the Indian unit was last seen trading at 67.5725. Yesterday, the rupee had closed 7 paise down at 67.49 against the US currency.
Retail inflation jumped to a four-month high of 4.87 per cent in May on costlier food items such as fruits, vegetables and cereals coupled with high fuel rates. However, industrial production expanded by 4.9 per cent in April on improved performance by manufacturing and mining sectors as also a robust offtake of capital goods. Foreign institutional investors (FIIs) sold shares worth Rs 1,168.88 crore yesterday, as per the provisional data.
Domestic stocks drifted higher in early trade. At 9:25 IST, the barometer index, the S&P BSE Sensex, was up 131.46 points or 0.37% at 35,823.98. The Nifty 50 index was up 33.70 points or 0.31% at 10,876.55 . On the global front, the US Federal Reserve is expected to raise interest rates Wednesday, 13 June 2018 as the US economy remains solid. European Central Bank rates decision is on Thursday, 14 June 2018 in which policy makers are poised to hold formal talks on ending its bond-buying program. The Bank of Japan meets on Friday, 15 June 2018 with no change to policy expected. Overseas, most Asian stocks were trading lower as investors turned their attention to the major central bank meetings this week. US stock indexes finished higher yesterday, 12 June 2018 as investors put the US-North Korea meeting in the rear-view.
Meanwhile, the dollar approached a three-week high against the yen and stood tall against the euro on Wednesday ahead of the Federal Reserves policy meeting, which could give clues on how many more rate hikes might come out of the U.S. this year. The dollar index against a basket of six major currencies (DXY) inched up 0.03 percent to 93.829 after rising 0.25 percent the previous day.