The Indian rupee on Tuesday fell, while 10-year bond yield rose as a surprise spike in retail inflation spurred concerns that the Reserve Bank of India (RBI) may wait more for cutting interest rates. Fall in global markets ahead of the US Federal Reserve meeting and the UK referendum also dampened sentiments.

The rupee opened at 67.20 a dollar and touched a low of 67.29. At 2.03pm, the home currency was trading at 67.27, down 0.20% from its previous close of 67.14.

India’s 10-year bond yield was trading at 7.538%, compared with Monday’s close of 7.524%.

Most Asian currencies were trading higher. Japanese yen was up 0.397%, Hong Kong dollar gained 0.049% and South Korean won rose 0.022%. Meanwhile, Philippines peso was down 0.591%, Indonesian rupiah 0.635%, Taiwan dollar fell 0.068% and Malaysian ringgit fell 0.0431%.

India’s benchmark Sensex index fell 0.49% or 128.65 points to 26,268.12. In the last four sessions, Sensex fell 2.68% or 752.54 points. So far this year, Sensex is up 0.69%.

The wholesale price inflation (WPI) rate for May rose 0.79% its highest since October 2014. According to a Bloomberg poll of analysts, WPI will be at 0.44% for May compared to 0.34% in April.

Fed officials will meet on 14-15 June to discuss policy, while the Bank of Japan is likely to stay on hold at its 16 June meeting. The UK referendum on its European Union membership is due on 23 June.

So far this year, the rupee has weakened 1.35%, while foreign institutional investors (FIIs) have bought $2.81 billion from the local equity market and sold $1.17 billion in debt markets.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 94.686, down 0.34% from its previous close of 94.362.

Source: livemint.com