Rupee opened marginally high after yesterdays positive reading of Consumer Price Index and Industrial Production.
Rupee opened at 61.486 a bit higher than yesterday close of 61.51 as Inflation came down to 5.52% for October compare to earlier 6.46%. Falling inflation is a good sign for economy. Industrial Production also improved to 2.5% against last 0.4%. We may not see heavy appreciation in rupee as state run banks are buying dollars at lower levels.
Continuous fall in oil and food prices in last two months has pushed inflation down. Market players are expecting RBI to cut interest rate sooner than estimated. Bank stocks rallied yesterday on the same expectation and market indices touched record levels.
Strengthening fundamentals and continuous flow of foreign fund is expected to support rupee. In November, foreign funds have bought shares worth $1.36 billion and debt worth $597 million, making total inflows so far this year of $15.1 billion and $23.1 billion in the two asset classes respectively.
Tomorrow Indian Ministry of Commerce and Industry will release Wholesale Price Index which is expected to fall further at 2.27% from 2.38%. RBI will also release forex reserve data.
The currency is expected to trade within the range of 61 to 62 in coming days.