The Hindu Business Line : Rupee holds on to gains vs dollar

MUMBAI: The rupee held on to most of its gains on Thursday, with the dollar being sold by market players. The domestic unit finished the day at 43.42 levels, a tad lower from its previous close of 43.40.

According to a dealer with a public sector bank here, the rupee ruled firm, even hitting a high of 43.31 in intra-day trade before some dollar buying interest put a lid on its appreciation.

"The rupee appreciation sustained on the back of dollar sales by banks and customers. The outlook for the Indian unit remains bullish, with the Fed also announcing a quarter-point hike," said the dealer at the public sector bank.

The forwards traded higher, buoyed by the firm trend in the spot rupee. The six-month forward closed at 2.1 per cent against 1.84 per cent previously. The 12-month forward finished at 1.7 per cent (1.56 per cent).

The debt market was cheered by the Government decision to raise the interest rate on the EPF to 9.5 per cent. The market also moved higher following the hike in the federal funds rate to 2.25 per cent. The benchmark 7.38 per cent 10-year paper closed a brisk session at 6.727 per cent as against its previous close of 6.68 per cent.

Call rates moved in a band of 4.8-4.85 per cent, reflecting comfortable liquidity conditions in the inter-bank money market. According to a dealer in a public sector bank, foreign and new private sector banks were the main borrowers in the market. In the CBLO market, 142 trades aggregating Rs 6,422.30 crore were put through in the rate range of 4-4.75 per cent.

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