INR appreciated today to 60.935 from Monday close of 61.105 as Consumer Price Inflation came below estimate at 6.46% for August from 7.80% in July.
Today Indian Ministry of Commerce and Industry will release Wholesale Price Inflation data for September at 12pm which is expected to fall at 3.3% from last 3.74%. Fuel and Food inflation may also come down as prices of energy and agricultural products remained low last month. In August Fuel and Food inflation were seen at 4.5% and 5.2% respectively.
Yesterday the currency remained range bound near to 61.20-61.35 in morning trading as Industrial Production came to 0.4% which was expected at 2.4% discouraged traders but in the last hour of market there was observed selling side pressure as traders were expecting fall in inflation as it resulted.
Yesterday RBI sold government bond of about 65 per cent of Rs 10,000 crore stipulated for an open market operation, which was primarily aimed at sucking excess funds from the system. These bonds have varying maturities of seven, 12 and 13 years.
RBI is likely to keep its benchmark interest rate unchanged to fight against inflation. We may see change in RBI stance in the first quarter of 2015.
Government bond yields are expected to fall further on improving fundamentals. The benchmark yield may dip to 8.25 per cent or even lower in the next three-six months.