Home >Market >Stock-market-news >Rupee strengthens to 66.56 per US dollar as repo rate remains unchanged
The yield on India’s 10-year benchmark bond was trading at 7.76%, compared with its previous close of 7.78%. Photo: Mint
The yield on India’s 10-year benchmark bond was trading at 7.76%, compared with its previous close of 7.78%. Photo: Mint

Rupee strengthens to 66.56 per US dollar as repo rate remains unchanged

The home currency opened at 66.53 per US dollar, and touched a high and a low of 66.43 and 66.59, respectively

Mumbai: The Indian rupee on Tuesday strengthened for the second consecutive session against the US dollar after Monday’s government data showed stronger-than-estimated growth in gross domestic product (GDP) and improvement in fiscal deficit data for the September quarter.

At 2pm, the home currency was trading at 66.56, up 0.16% from its previous close of 66.67. The local unit opened at 66.53 per US dollar and touched a high and a low of 66.43 and 66.59, respectively.

The Reserve Bank of India (RBI) governor Raghuram Rajan left policy rates unchanged at the monetary policy review on Tuesday, the last in the current calendar year.

The yield on India’s 10-year benchmark bond was trading at 7.76%, compared with its previous close of 7.78%. Bond yields and prices move in opposite directions.

Nikkei’s Manufacturing Purchasing Managers’ Index (PMI), compiled by Markit, fell to a 25-month low of 50.3 in November from October’s 50.7. A reading above 50 indicates expansion.

The latest data released by the statistics department on 30 November showed India’s GDP growth was at 7.4% in the September quarter compared with 7% in the June quarter as measured at market prices. Another measure—gross value added (GVA) at basic prices—showed that economic growth accelerated to 7.4% in July-September against 7.1% in April-June.

The country’s fiscal deficit was 4.11 trillion during April-October, or 74% of the target for FY16. The deficit was 89.6% of the target in the same period last year, according to the controller general of accounts website.

The benchmark Sensex index fell 0.02%, or 4.39 points, to 26,150.06 points.

Foreign portfolio investors pulled out more than $1.39 billion from the domestic equity and bond markets in November. In 2015-16 so far, foreign institutional investors (FIIs) have sold $2.47 billion in equity, the steepest selling since fiscal year 2009. In 2015-16, FIIs were net sellers in equity in five out of eight months.

Since the beginning of this year, the rupee has lost 5.14%, while FIIs have bought $3.53 billion from local equity and $8.21 billion from bond markets.

Most Asian currencies were trading mixed. The Malaysian ringgit was up 0.59%, Indonesian rupiah 0.39%, Japanese yen 0.2%, and Singapore dollar 0.06%. However, China Offshore was down 0.31%, Taiwan dollar 0.12%, Thai Baht 0.05%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 100.02, down 0.14% from its previous close of 100.17.

The RBI on 30 November released a comprehensive framework for external commercial borrowings (ECBs) to make it easier for Indian companies to borrow funds overseas. The new framework, which has been finalized in consultations with the government, reduces restrictions on the end-use of funds borrowed overseas and expands the set of overseas lenders from whom funds can be borrowed. Most of these relaxations are likely to apply to long-term borrowings even as RBI continues to keep a check on the quality and quantum of short-term borrowings, Mint reported.

The world’s two biggest central banks will move decisively in opposing directions next week, with growing expectations that the European Central Bank could cut interest rates by 20 basis points and a US jobs report likely to seal the case for a Fed rate hike in next meeting. US Fed is scheduled for 16-17 December, Reuters reported.

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