Rupee weakened little in morning trading as dollar strengthened against major currencies. Dollar index which measures performance of dollar against basket of six major currencies gained by 0.06% to 87.64.
Today India Ministry of Statistics will release Consumer Price Index after market hours. Inflation is expected to cool further to 5.67% from earlier 6.46%.Indial will also release Industrial Production which is expected to remain unchanged at 0.4%.
If CPI comes as estimated then it would reach at its lowest. Cooling oil and commodity prices supporting government to control inflation and deficit. Continuous fall in oil prices likely to improve trade balance and falling agricultural commodity prices may reduce food inflation.
The dollar has strengthened over 7 per cent over the last four months, but the rupee has remained within the 58-62 a dollar range mainly due to over 30 per cent fall in crude prices and continued restrictions on gold imports. Rupee has remained the best performer among emerging economies in this year.
Market is expecting that the fall in CPI may urge RBI to cut interest rate earlier than what is expected. It has already appreciated bank stocks in the market.
Foreign investors have bought shares worth $1.3 billion in November, taking total inflows so far in 2014 to $14.96 billion. Net inflows into debt in the year stand at $22.9 billion.
Rupee has reacted more quickly to dollar compare to oil prices as seen historically and dollar is expected to strengthen further which is the matter of concern. But RBI governor may not let rupee depreciate heavily as observed from his earlier interventions.
In near term rupee is expected to trade in the range of 61-62 a dollar.