The Indian rupee weakened past the 61 mark against the dollar in morning trade on Monday, tracking weak Asian currencies and ahead of Wholesale Price Index (WPI)-based inflation data for August.

The government will release WPI inflation data later in the day on Monday. Bloomberg expects WPI inflation will be 4.33% for August as compared with 5.19% in July.

The local unit opened at 60.93 per dollar and soon touched a intra-day low of 61.07—a level last seen on 14 August. At 9.41am, the home currency was trading at 61.03, down 0.60% from its previous close of 60.66. India’s benchmark index, Sensex, was trading at 26,853 points on BSE, down 0.8%.

Most of the Asian currencies were trading lower. The Indonesian rupiah was trading down 0.66%, Malaysian ringgit 0.38%, Philippines peso 0.24%, Singapore dollar 0.19%, South Korean won 0.15%, China offshore 0.08% and Thai baht 0.07%.
The yield on India’s 10-year benchmark bond was trading at 8.489%, compared with its Friday’s close of 8.503%. Bond yields and prices move in opposite directions.

Since the beginning of this year, the rupee has gained 1.88%, while foreign institutional investors have bought $14.10 billion from local equity markets.The dollar index, which measures the US currency’s strength against major currencies, was trading at 84.177, down 0.07% from the previous close of 84.240.

A US Federal Reserve paper released on 8 September showed investors underestimated the speed at which the Fed might raise interest rates. That raised concerns the US central bank could signal an earlier-than-expected rate hike at its next policy meeting on 16-17 September.

Any decision by the Fed to raise rates, which have been held near zero since December 2008, will have implications for India, as it could lead to capital outflows, weakening the rupee and inflating costs of imported commodities, Reuters reported.
On Friday, the government issued Index of Industrial Production (IIP) and Consumer Price Index (CPI)-based inflation data. IIP rose 0.5% in July as compared with 3.9% in the previous month, the slowest in four months. Data released by the statistics office showed CPI inflation slowed to 7.8% in August from nearly 7.96% in the previous month.

Source:- livemint.com