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Home » News » Markets » Rupee

Jul 15, 2013, 06.16 PM | Source: Reuters

Rupee weakens as data stokes worries about economic outlook

The rupee fell on Monday as recent economic data worsened concerns about an economy reeling under a record current account deficit, clouding the outlook for the currency that hit a record low this month.

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Rupee weakens as data stokes worries about economic outlook

The rupee fell on Monday as recent economic data worsened concerns about an economy reeling under a record current account deficit, clouding the outlook for the currency that hit a record low this month.

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Rupee weakens as data stokes worries about economic outlook
The rupee fell on Monday as recent economic data worsened concerns about an economy reeling under a record current account deficit, clouding the outlook for the currency that hit a record low this month.

Also read: Rupee off lows; US, large state-run banks sell dollars

Data after the close of markets on Friday showed industrial output unexpectedly contracted in May from a year ago, while retail inflation accelerated in June.

Although data on Monday showed June wholesale inflation came in line with expectations at 4.86 percent, it still marked the first acceleration in four months.

With the Reserve Bank of India (RBI) widely expected to keep interest rates on hold at its policy review later this month, analysts say policymakers will need to take measures to shore up confidence and boost growth.

RBI Governor Duvvuri Subbarao met the finance minister in New Delhi on Monday, saying he would take into account the inflation figures for monetary policy review.

"The data on IIP and exports has been really bad. Trade deficit has come down but the same is not a happy situation as it is indicating a slowdown," said Anil Kumar Bhansali, vice-president at Mecklai Financial.

The partially convertible rupee closed down 0.6 percent at 59.89/90 per dollar compared with 59.56/57 on Friday.

In the offshore non-deliverable forwards, the one-month contract was at 60.31 while the three-month was at 61.01.

The rupee hit a record low of 61.21 on July 8, and has rebounded somewhat after policymakers placed curbs on speculative trading, though investors say stronger measures will be needed to narrow the current account deficit.

India should look at the option of raising overseas capital via selling bonds to non-resident Indians (NRIs) once the currency stabilises, the chairman of the Prime Minister's Economic Advisory Council, C. Rangarajan, told news channel CNBC-TV18.

In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed around 60.03 with a total traded volume of USD 2.4 billion.

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