The Indian rupee closed at one-month high against the US dollar, while 10-year bond yield fell to a fresh three-year low, on Wednesday.

The global turn in sentiment towards emerging market economies helped the currency. Hopes that the new governor of the Reserve Bank of India may be more inclined to cut rates also helped sentiment.

The rupee closed higher in 11 out of 15 trading sessions while the 10-year bond yield closed lower in 15 out of 21 trading sessions.

The home currency closed at 67.06—a level last seen on 10 June, up 0.20% from its previous close of 67.18. The local currency opened at 67.11 a dollar and touched a high of 67.02—a level last seen on 13 June.

India’s 10-year bond yield closed at 7.284%—a level last seen on 19 June 2013— compared with Tuesday’s close of 7.337%. It opened at 7.337% and touched a low of 7.282%, a level last seen on 19 June 2013.

India’s benchmark Sensex index rose 0.03%, or 7.04 points, to close at 27,814.12. In the last 11 trading sessions, Sensex gained 5.34% and so far this year, it has gained 6.5%.

According to a Bloomberg report, Narendra Modi and Arun Jaitley may meet to take call on next governor in next few days. Former deputy governors Rakesh Mohan, Subir Gokarn, the chairman of the NITI Ayog Arvind Panagariya and current deputy governor of RBI Urjit Patel have been touted as contenders.

Most Asian currencies closed higher after Malaysia cut rates and China’s trade data beat analysts’ estimates. Malaysia overnight policy rate was cut to 3% from 3.25%, while China’s exports grew 1.3% year-on-year in yuan terms in June, beating +0.3% estimates, Bloomberg reported.

Philippines peso was up 0.4%, Malaysian ringgit 0.38%, Indonesian rupiah 0.26%, South Korean won 0.15%, Thai baht 0.14%, Taiwan dollar 0.06%, Singapore dollar and China offshore gained 0.05% each. However, Japanese yen fell 0.1%.

The government will issue Wholesale Price Index (WPI)-based inflation data for June on 14 July. According to Bloomberg analyst estimates, WPI will be at 1.3% in June compared with 0.79% in May.

India’s factory output rose unexpectedly in May and retail inflation quickened for the fourth straight month in June, reducing the chances of a rate cut by RBI in its monetary policy review in August, the last under governor Raghuram Rajan.

Consumer price index (CPI)-based inflation accelerated marginally to 5.77% in June from 5.76% a month ago on higher food prices, while the Index of Industrial Production (IIP) rose 1.2% in May, against Bloomberg’s estimate of a 0.3% contraction, on the back of a pick-up in manufacturing activity.

So far this year, the rupee is down 1.34%, while foreign institutional investors have bought $3.17 billion in equity and sold $1.73 billion in debt markets.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 96.328, down 0.11% from its previous close of 96.441

source:www.livemint.com