Indian rupee strengthened for the second consecutive session on Wednesday against the US dollar tracking gains in its Asian peers even as traders reassessed the economic impact of the fast-spreading coronavirus outbreak.
Rupee closed at 71.26 a dollar, up 0.11% from Tuesday's close of 71.34. The Indian unit had opened at 71.23 a dollar.
Traders are preferring not to take big positions amid fears the govt may announce a wider budget
deficit and higher borrowings at the Feb. 1 budget, says Anoop Verma, a bond trader at DCB Bank in Mumbai.
Yield on the 10-year government bond was at 6.572% compared with its previous close of 6.58%. "Bonds will continue to trade in a narrow range ahead of the budget". He said.
Govt is likely to announce record bond sales of 7.8t rupees for FY21, according to a Bloomberg survey of traders and analysts. That’s versus 7.1t rupees budgeted for the current year.
Benchmark index, Sensex index closed up 0.57% or 231.80 points to 41198.66 points. Year to date, the index has lost 0.13%.
Year to date, the rupee gained 0.18%, while foreign investors have bought nearly $2.21 billion in Indian equities and sold $1.47 billion in debt.
Asian currencies closed higher. Malaysian ringgit 0.14%, Japanese yen 0.08%, Indonesian rupiah 0.07%, Hong Kong dollar 0.04% and China Offshore 0.03%.
The dollar index, which measures the US currency’s strength against a basket of major currencies, was at 98.094, up 0.08% from its previous close of 98.018.
(Bloomberg contributed to the story.)