Mumbai: The rupee eked out some gains on Wednesday supported by the dollar’s fall versus the euro and the sterling after the Bank of England minutes suggested it was not considering further quantitative easing to aid recovery.
The BoE’s policymakers considered the case for both easing and tightening policy this month, before voting eight to one to keep interest rates at a record low of 0.5%, minutes showed on Wednesday.
There had been some speculation that the minutes could reveal a three-way split, meaning that one or more members voting for further quantitative easing to support the recovery, and sterling rallied when the minutes gave no sign of that.
The rupee closed at 46.5550/5650 per dollar, 0.2% stronger than its 46.64/65 close on Tuesday.
Forex and debt markets will be shut on Thursday for a local holiday.
“The rupee inched up after the Bank of England minutes, tracking gains in the pound and the euro. That coupled with gains in equities further boosted the rupee,” said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.
“There’s going to be two days of overseas trading, so Friday’s direction will depend mostly on that.”
The index of the dollar against six major currencies was down 0.1%.
The euro cut losses against the dollar, while sterling rebounded as investors reversed short positions after the release of minutes from the Bank of England’s last policy meeting.
Late gains in shares also raised hopes for some more fresh foreign capital inflows. So far in 2010, foreigners have bought shares worth $11.7 billion in addition to last year’s $17.5 billion inflow.
Shares closed 1.2% higher on stock-specific buying, supported by firm Asian equities, but dealers said the rally did not hold much conviction due to lack of any immediate domestic triggers.
One-month offshore non-deliverable forward contracts were at 46.75, weaker than the onshore spot rate.
In the currency futures market, the most traded near-month dollar-rupee contracts on the National Stock Exchange and MCX-SX closed at 46.63 and 46.6350, with the total traded volume on the two exchanges at $5 billion.