India to announce GDP data tomorrow

The Indian rupee posted a slight gain on Wednesday, continuing its range-bound trading ahead of economic growth data on Friday, while end-of-month oil-related dollar buying was offset by corporate selling of greenbacks. On Friday India will report April-June gross domestic product (GDP) data, which is expected to show the economy remains in its deepest slump in nine years. The data comes during a time when the rupee 1-month implied volatility has been trading at near three-month lows. The relative calm could change given worries growth would fall below 5 per cent, even as inflationary pressures remain. Reserve Bank of India Governor Duvvuri Subbarao said on Tuesday inflation remained too high and needs to fall further or risk more damage to the economy. “A sub-5 per cent reading would see INR hit and USD/INR would probe back above 56 in my view,” said Jonathan Cavenagh, currency strategist at Westpac Banking Corp. “However, how much follow through remains questionable given that Bernanke speaks later that day and the market may be reluctant to take a strong view on USD/Asia pairs ahead of this speech.” The partially convertible rupee closed at 55.6250/6350 per dollar as per the SBI closing rate, compared to its 55.6650/6750 close on Tuesday. Federal Reserve Chairman Ben Bernanke will give a speech on Friday at the Jackson Hole gathering amid growing hopes for a new asset purchase programme that could push up emerging market currencies at the expense of the dollar. The rupee also found support after the euro’s gained. European Central Bank President Mario Draghi wrote a newspaper opinion piece arguing the central bank needs to employ “exceptional measures” at times to ensure effective monetary policy but will act within its mandate for price stability. In the lead-up to GDP, currency markets are expected to remain range-bound, with some corporate selling of dollars seen in recent sessions. A state-run power finance company sold around $250 million in the session, dealers said. The one-month offshore non-deliverable forward contracts were quoted at 55.99 while the three-month was at 56.66. In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 55.94, with a total traded volume at $5.4 billion. Meanwhile, Gold prices advanced modestly at the bullion market here today on the back of fresh buying interest from retailers and investors. In contrast, silver declined further due to continued selling by speculators and traders.                                            From gulftoday