Rupee adds substantial weight despite worse than expected May WPI data

14 Jun 2011 Evaluate

Indian rupee made a smart bounce back from previous day’s drubbing and strengthened substantially on Tuesday, comforted by the dollar weakness against major currencies, while the gains in the local equities and Asian currency too aided the sentiment. Local bourses shrugging off the worst than expected May WPI data ended the session with gains, tailing the positive global setup. The annual rate of inflation, based on monthly WPI, came much higher above the expectation at 9.06% (Provisional) for the month of May, 2011 (over May, 2010) as compared to 8.66% (Provisional) for the previous month and 10.48% during the corresponding month of the previous year. Meanwhile, on the global front, the Euro rose on Tuesday, boosted by improved risk appetite after Chinese inflation data eased global growth concerns while quickly absorbing a hike in Chinese banks' reserve requirements. China raised banks' reserve requirements by 50 basis points. On the other hand, the Dollar was mostly weaker as moderate Chinese inflation data fanned hopes that China will avoid a hard economic landing.

Finally the Rupee ended at 44.74, stronger by 12 paise from its previous close of 44.86 on Monday. It touched a high and low of 44.83 and 44.71 respectively. The Reserve Bank of India's reference rate for the Dollar stood at 44.77 and for Euro it stood at 64.55 on June 14, 2011. While, the RBI's reference rate for the Yen stood at 55.76 and the reference rate for the Great Britain Pound (GBP) stood at 73.4519. The reference rates are based on 12 noon rates of a few select banks in Mumbai.

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