Rupee, bond prices rise after RBI announces dividend payment
At 9.10am, the rupee was trading at 68.47 a dollar, up 0.24% from its previous close of 68.63.
Mumbai: The Indian rupee and bond prices on Thursday gained after the Reserve Bank of India (RBI) announced payment of Rs 50,000 crore dividend to government, helping the centre to stick its fiscal road map. Overnight, a drop in the crude oil prices also supported the rally. At 9.10am, the rupee was trading at 68.47 a dollar, up 0.24% from its previous close of 68.63. The currency opened at 68.47 a dollar and touched a high of 68.46.
The 10-year bond yield stood at 7.752%, from its Wednesday’s close of 7.781%. Bond yields and prices move in opposite directions.
RBI on Wednesday approved in its board meeting that it will pay Rs 50000 crore dividend for July-June 2018 year, 63% higher than previous year to government. The surplus transfer has come at a time when the government showing an improvement in the June quarter with fiscal deficit working out 69% of the budgeted estimates from 80.8% in April June quarter of the preceding fiscal.
The move will help the government to fund its fiscal deficit especially in the election year. For 2018-19, the government estimates fiscal deficit target to 3.3% of gross domestic product.
Benchmark Sensex Index rose 0.31% or 117.50 points to 38,005.06. Since January, it has gained 10.6%.
So far this year, the rupee has weakened 6.7%, while foreign investors have sold $394 million and $5.51 billion in equity and debt markets, respectively.
Meanwhile, traders were cautious due to escalation of trade war between the world’s two largest economies. China said late Wednesday it will impose 25% tariffs on an extra $16 billion of imports from the U.S. from 23 Aug, matching Washington’s latest move in the trade war.
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