BackRupee strengthens 12 paise against dollar to 61.47
Dealers avoided taking any dollar positions ahead of RBI's second quarter monetary policy review
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Mumbai: The rupee rose slightly against the dollar in a quiet trading day on Thursday as dealers avoided taking positions ahead of the Reserve Bank of India’s (RBI’s) fiscal second-quarter monetary policy review on Tuesday.
After opening at 61.5750 to a dollar, little changed from Wednesday’s close of 61.59, it inched up to a intra-day high of 61.36 on the back of a strong opening in the local equities market. It then weakened to 61.6850 as the stock markets fell from a three year peak.
India’s benchmark Sensex dropped to 20,725.43 points from a three-year high of 21,039 touched in the early trade on Thursday.
The rupee closed at 61.47 per dollar, up 0.20% from its previous close.
“There is nothing special happening in the market. Stock market inflows are there but dealers are mostly avoiding taking positions ahead of the RBI policy," said N.S. Venkatesh, treasurer at IDBI Bank Ltd, a state-owned bank.
The central bank is widely expected to hike its benchmark lending repo rate by 25 basis points (bps) to 7.75% and cut its emergency lending rate by a similar quantum to 8.75%, indicating the return of normalcy in the money markets.
One basis point is one-hundredth of a percentage point.
RBI had hiked the marginal standing facility rate by 200 bps in July to support a rapidly falling rupee.
Since January, the rupee has weakened 10.53% and has lost the third most after Indonesian rupiah and Japanese yen among Asian currencies.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 79.179, down 0.11% from the previous close of 79.264.
India’s benchmark 10-year bond yield stood at 8.586%, down 0.48% from previous close of 8.627%. It opened at 8.624% and touched a high and a low of 8.636% and 8.576%, respectively.
The overnight call money rate ended at 8.95%, down 0.33% from previous close of 8.98%. It opened at 9.05% and touched a high and a low of 9.05% and 8.90%, respectively.
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