Rupee opens at 66.82/$, up 4 paise

IIP reading contracted by 3.2%, a four year low. The number is in complete contrast with the growth of 9.9% during the prior month.

Indian Rupee opened higher at 66.82/$, up by 4 paise in early trade on Wednesday as against the previous close of 66.86/$. On Tuesday, Indian rupee extended the weakness against the greenback, impacted by foreign capital outflows and ensuing fall in domestic equities. On macroeconomic front, India's industrial output declined in November, while retail inflation scaled higher.    In this respect, IIP reading contracted by 3.2%, a four year low. The number is in complete contrast with the growth of 9.9% during the prior month. Of late, Industrial production data has been very mercurial and it is difficult to gauge the actual trend. Consumer Inflation (CPI) for December inched higher towards 5.61%, when compared with the reading of 5.41% during November.

On the global front, in China, the central bank has reduced intervention in the Forex markets this week after utilizing huge quantum of the Forex reserves in order to stem the weakness in Yuan.  Effectively, the arbitrage between the onshore and offshore Yuan has narrowed considerably. Market focus is now accentuated on slew of Chinese macro numbers releasing next week.

On Tuesday, the rupee ended at 66.86/$, weaker by 5 paise. The currency touched a high and low of 66.93 and 66.97 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 66.89 and for Euro stood at 72.74 on January 12, 2016. While, the RBI’s reference rate for the Yen stood at 56.91, the reference rate for the Great Britain Pound (GBP) stood at 97.1518.