R pares early gains on weak IIP data

Written by Agencies | Mumbai | Updated: Aug 10 2012, 09:12am hrs
The rupee on Thursday pared some gains on weak June IIP data but managed to end 15 paise higher at 55.27 against the US dollar on sustained capital inflows.

The rupee commenced remarkably higher at 55.18 a dollar at the Interbank Forex market from 55.42 previously and touched a high of 55.04 on early rise in domestic stocks and heavy capital inflows. However, late weakness in stocks induced by a 1.8% unexpected drop June industrial production and dollar demand from importers put pressure on rupee as it pared gains. The local currency fell back to a low of 55.39, before recovering slightly to close at 55.27. This was still a rise of 0.27% or 15 paise compared to Wednesdays close.

Bonds yields flat

Indias benchmark bonds ended steady on Thursday, stalling after three days of gains as traders grew cautious ahead of inflation data due early next week, though debt attracted some safe-haven bids earlier in the session after output data unexpectedly fell. Industrial output fell 1.8% in June, adding to pressure on new finance minister P Chidambaram to move quickly and help pull Asias third-largest economy from its worst slowdown in almost a decade. RBI governor Duvvuri Subbarao has indicated he is reluctant to cut interest rates due to inflationary pressures, while prodding the government to take measures to boost growth.