Rupee closes near 8-week high of 64.96 against US dollar
Intra-day, the Indian currency touched a high of 64.96, a level last seen on 14 August
Mumbai: The Indian rupee on Wednesday strengthened past 65 mark against the US dollar after the central bank raised foreign investors’ government bond investment limit on Tuesday.
The RBI set foreign investors’ limit in government debts in rupee terms and said such investments will be capped at a maximum of 20% of the outstanding of any individual security, Mint reported.
The limit for all foreign portfolio investors (FPIs) and long-term investors in central government bonds will rise to ₹ 1.665 trillion by 12 October and ₹ 1.795 trillion by 1 January, from ₹ 1.535 trillion now, the report said.
The gains in local equity and Asian currencies market, and IMF’s assessment that India will remain the world’s fastest growing economy, also boosted market sentiment on Wednesday.
The rupee closed at 64.96, last level close since 12 August, against the US dollar, up 0.7% from previous close of 65.41. The currency opened at 65.29 and touched a high of 64.96—a level last seen on 14 August.
According to currency dealers, rupee gained rapidly after the exchange rate crossed 65.45 a dollar – a crucial technical level.
“Once that level was crossed foreign investors were selling dollars heavily. At the same time, some inflow is there on account of next week’s debt auction," said a senior currency dealer with a foreign bank.
The benchmark Sensex index rose 0.38%, or 102.97 points, to close at 27,035.85.
The International Monetary Fund (IMF) said India will remain the world’s fastest growing economy. IMF expects the Indian economy to grow 7.3% this year, ahead of China, which will grow at 6.8%.
Most Asian currencies closed higher after disappointing US jobs data on Friday prompted futures traders to almost rule out a Federal Reserve interest-rate increase in 2015, Bloomberg reported.
Malaysian ringgit was up 3.64%, Indonesian rupiah 3.04%, Taiwan dollar 1.3%, Thai baht 1.15%, Singapore dollar 0.6%, Philippines peso 0.46%, South Korean won 0.38% and Japanese yen 0.08%.
The yield on India’s 10-year benchmark bond closed at 7.542% compared with its Tuesday’s close of 7.527%. Bond yields and prices move in opposite directions.
Since the beginning of this year, the rupee has lost 2.95%, while foreign institutional investors (FIIs) have bought $3.75 billion from local equity and $6.31 billion from bond markets.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 95.437, down 0.02% from its previous close of 95.455.
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