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Business News/ Market / Stock-market-news/  Rupee pares gains to close at 62.07 per dollar
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Rupee pares gains to close at 62.07 per dollar

The rupee gave up most of its gains against the US dollar after traders and importers bought back the US currency noting its sharp rise globally

The yield on India’s 10-year benchmark bond closed at 7.69% compared with its Wednesday’s close of 7.77%. It touched a low of 7.67—a level last seen on 15 July 2013. Photo: AFP Premium
The yield on India’s 10-year benchmark bond closed at 7.69% compared with its Wednesday’s close of 7.77%. It touched a low of 7.67—a level last seen on 15 July 2013. Photo: AFP

Mumbai: The rupee gave up most of its gains against the US dollar after local traders and importers bought back the US currency noting its sharp rise globally after the Swiss National Bank (SNB) abandoned its exchange rate cap against the euro.

The Indian currency which had risen sharply after the Reserve Bank of India (RBI) had cut interest rates earlier on Thursday gave up its gains following the global developments after a busy day of trading.

The SNB also widened the negative interest rate it gives on deposits to minus 0.75% from 0.25% and also decided that the 1.20 per euro cap had to be discontinued.

“The measures by the Swiss central bank is what really made the move. The euro fell against the dollar and the resulting strengthening ensured that the market was caught short resulting in huge dollar demand here. Importers also came in to cover their positions noting the sharp rise in the rupee and on expectations that the currency will not move up sharply from those levels," said a dealer with a foreign bank.

Switzerland’s franc rose to the strongest in more than three years. The rupee ended at 62.07 a dollar, up 0.2% from its previous close of 62.19 but down from its days high of 61.48.

The rupee had risen sharply against the US dollar as dealers bought the Indian currency on expectations that India’s growth prospects will improve following the interest rate cut by the Reserve Bank of India (RBI) early on Thursday.​

The RBI cut its benchmark repo rate at which it lends to banks by 25 basis points to 7.75% citing lower inflation. The cut was announced before the local debt and equity markets opened for trading and led to a rise in the rupee and fall in government yields.

India’s benchmark equity index, BSE Sensex, ended at 28,075.55 points, up 2.66% or 728.73 points.

The yield on India’s 10-year benchmark bond closed at 7.69% compared with its Wednesday’s close of 7.77%. It touched a low of 7.67—a level last seen on 15 July 2013. Bond yields and prices move in opposite directions.

Since the beginning of the 2015, the rupee has strengthen 1.6% against the dollar, the second best performer in Asian currencies market after Japanese Yen, while foreign institutional investors have sold $315.3 million from local equity markets and bought $1268.3 million from the debt market.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 91.928, down 0.25% from its previous close of 92.161.

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Published: 15 Jan 2015, 09:29 AM IST
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