Indian Rupee dropped after Boost in Consumer Prices

India's rupee went down 9 paise to 66.12 against US dollar Wednesday after reports of increases in consumer prices. 

According to Bloomberg the decline of the rupee is due to concerns that higher US interest rates will trigger more capital outflows. Other Asian currencies also went down along with the rupee due to the October forecast from economists who project a boost in consumer prices. The National Securities Depository Ltd. reported that overseas funds have taken out 24.7 billion rupees, or $374 million, from Indian bonds since the end of October. This leads to biggest outflow since May.

Economic Times reported that US consumer prices increased 0.2 percent in October after two consecutive months of dropping. On another note, the US manufacturing production went up 0.40 percent month-on-month in October. This makes the October 27-28 Federal Open Market Committee policy meet very important. Its results will be released on Thursday. Besides the rupee, the Thai baht went down 0.24 percent, the Malaysian ringgit dropped 0.08 percent, the Chinese yuan is down 0.07 percent and the Singapore dollar dropped 0.02 percent.

Meanwhile, Live Mint wrote that Reserve Bank of India workers plan to go on strike Thursday to protest against how the government takes powers from the central bank, which is believed to affect the settlements of the payment platform of the central bank.

HDFC Bank Senior VP Bhasjar Panda said, "If you compare the rupee with the Brazilian real or the Russian rouble or any of these competing currencies, the domestic unit has done much better. In fact, if you look at the data, dollar-rupee has not depreciated as much as these currencies have. However, we need to remain near the real value of rupee, which we believe is something around, say, 65.80 to 66. So a 1 or 2 per cent depreciation from here would not matter much in the short term."

"Dollar strength is working against the rupee, as with other emerging-market currencies," DCB Bank Ltd's Navin Raghuvanshi said. He believes that the December Fed rate hike will happen as futures show a 66 percent with 50 percent in October.