Mumbai: The rupee fell for the fourth straight session to a fresh 16-month low ahead of the release of consumer price inflation data as traders and forex participants turned cautious after the wholesale price inflation unexpectedly rose. The local currency closed at 67.52 a dollar, down 0.27 per cent from its previous close of 67.32.
“Higher-than-expected Wholesale Price Index-based inflation data for April, released earlier on Monday, led to fears of a sharp rise in Consumer Price Index-based inflation. This triggered a decline in government bonds yields, prompting overseas investors to pull out funds. The rupee fell further against the dollar due to persistent purchases of the greenback by foreign banks, likely for foreign portfolio investors who pulled out funds from domestic financial markets,” said IFA Global, a leading corporate forex advisory.
Meanwhile, RBL Bank’s Rajni Takhur said, “At a time when economic healing process is underway, rising price pressure driven by high global oil prices present a very difficult dilemma for RBI in terms of holding rates to support growth momentum and rising rates to defend the currency against swings.”
