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Rupee depreciates despite 41 months low inflation data

14 May 2013 Evaluate

Indian rupee depreciated on Tuesday on account of higher demand of the US currency from banks and importers amidst the strength of dollar against other currencies in the global market. Although, the Indian currency appreciated significantly in the intra-day trade on the back of encouraging Inflation data, it soon lost all the strength to close near day’s lowest level. Declining for the second straight month, the annual rate of inflation, based on monthly WPI, slowed down to its lowest since November 2009 at 4.89% (Provisional) for the month of April, 2013 (over April, 2012), as compared to 5.96% (Provisional) for the previous month. Meanwhile, euro’s weakness also added to the downside for the local unit. On the global front, euro fell on Tuesday after German investor morale pointed to a tepid recovery in Europe's largest economy and offset a bigger-than-expected rise in industrial output in the euro zone.

Finally the rupee ended at 54.82, weaker by 12 paise from its previous close of 54.70 on Monday. The currency touched a high and low of 54.83 and 54.53 respectively. The Reserve Bank of India's (RBI) reference rate for the dollar stood at Rs 54.62 and for Euro it stood at Rs 71.01 on May 14, 2013. While, the RBI’s reference rate for the Yen stood at 53.85, the reference rate for the Great Britain Pound (GBP) stood at 83.6729. The reference rates are based on 12 noon rates of a few select banks in Mumbai.

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