Rupee closes at five-week high on FII inflows for HDFC Bank shares
The rupee ended at 67.06 against the US dollar, up 0.52% from its previous close of 67.41
Mumbai: The Indian rupee on Friday closed at a five-week high against the US dollar on higher demand for the currency from foreign investors to buy shares of HDFC Bank Ltd.
The rupee ended at 67.06 against the US dollar, up 0.52% from its previous close of 67.41. The currency opened at 67.43 a dollar and touched a high of 67.01—a level last seen on 8 May.
“Rupee demand for HDFC Bank shares is mainly supporting the currency”, Bloomberg reported.
Earlier Mint reported foreign investors are likely to buy more than $ 1 billion of the stock on Friday when a trading window for them opens for a day.
Markets regulator Securities and Exchange Board of India (Sebi) has asked stock exchanges to close the trading window—popularly known as the “6 lakh series” which allowed FIIs to trade among themselves in stocks where the foreigners’ quota has been exhausted—effective 1 July.
Meanwhile, the 10-year government bond prices declined for the fourth session after accelerating economic growth amid raising crude oil increased expectations of a rate hike at next Reserve Bank of India (RBI) policy meeting.
The 10-year bond yield ended at 7.848% from its Thursday’s close of 7.826%. Bond yields and prices move in opposite directions.
Indian economy accelerated to 7.7% in the three months ended 31 March, beating the median estimate of 7.4%, government data showed on Thursday. That makes India the fastest growing major economy.
RBI’s next policy decision will be out on 6 June.
“Current macro data—rising core inflation amid strong domestic demand—are signalling that the output gap is closing rapidly. The April core inflation print was significantly above expectations. The Q1 GDP data should give the monetary policy committee enough comfort (on growth) to focus on inflation risks stemming from higher oil prices, a weaker currency and higher minimum support prices”, said Nomura Research in a note to its investors.
“We expect these risks to tilt the Reserve Bank of India’s current “neutral” stance to “withdrawal of accommodation” at the 6 June policy meeting, followed by rate hikes of 25bp each in the forthcoming meetings on 1 August and 4 October. The June policy decision is a close call; we assign a 40% probability to the MPC voting for a 25bp hike in June itself, followed by another 25bp hike in August”, the report added.
Fiscal deficit in the year ended March 2018 came in at 3.53% of gross domestic product, in line with the revised estimates, government data showed.
India revised its fiscal deficit target in February to 3.5% of GDP from 3.2% of GDP for the 2017/18 fiscal year. For the current fiscal year, the government estimates to trim the deficit to 3.3% of GDP.
So far this year, the rupee has weakened 5.7%, while foreign investors have sold $168.10 million and $4.50 billion in equity and debt markets, respectively.
Benchmark Sensex Index fell 0.27% or 95.12 points to 35,227.26. Since January, it has gained 2.5%.
Editor's Picks »
- With fall of the last dove, MPC minutes portend more than one RBI rate hike
- RITES IPO ticks the valuations box, but not the growth one
- Is Reliance Jio really India’s most profitable telecom firm?
- How US-China trade war will affect India
- Dear ICICI Bank board, giving a red card to Chanda Kochhar is not enough