Mumbai: The rupee on Wednesday recovered from its fresh all-time low and strengthened against the US dollar after better-than-expected August trade data. At 2.55pm, the rupee was trading at 72.21 a dollar, up 0.67% from its Tuesday’s close of 72.70. The home currency opened at 72.75 per dollar and touched a low of 72.90 in morning trade.
India’s trade deficit stood at $17.40 billion in August, down from $18.02 billion a month ago. Exports grew 19.21% to $27.84 billion while imports rose 25.41% to 45.24 billion, PTI reported.
Moreover, Bloomberg reported that Prime Minister Narendra Modi may hold a economic review meeting this weekend to support the currency. “Prime Minister Narendra Modi to review health of the economy during the weekend and may announce measures on rupee and oil after meeting,” Bloomberg reported, quoting a government official. “We are not ruling out a rate hike by RBI,” the official added.
The 10-year bond yield stood at 8.154%, down from its previous close of 8.181%. Bond yields and prices move in opposite directions.
Traders are cautious ahead of key consumer price inflation and index of industrial production data due after 5.30pm. According to Bloomberg estimates, the Index of Industrial Production will be at 6.5% for July from 7% a month ago. Retail inflation may come in at 3.78% in August, down from 4.17% in July.
So far this year, the rupee has weakened 12.3%, while foreign investors have sold $538.20 million and $6.38 billion in the equity and debt markets, respectively.
The Sensex rose 0.73%, or 272.74 points, to 37,685.87. Since January, it has gained 9.86%.
Asian currencies were trading lower on Wednesday. The South Korean won was down 0.21%, Thai Baht 0.15%, China Offshore 0.14%, Singapore dollar 0.12%, Malaysian ringgit 0.08%. However, the Japanese yen was up 0.14% and the Indonesian rupiah 0.05%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.154, down 0.1% from its previous close of 95.249.