Heavy dollar selling and a stronger euro helped the rupee close higher at 55.52 against the dollar on Thursday, up 65 paise from its previous close. “The sharp rise in Euro due to European Central Bank President’s comments to “do whatever necessary to protect the Euro” strengthened the rupee,” said Mr N.S. Venkatesh, Head of Treasury, IDBI Bank. The currency unit had opened higher at 56.05 on steady euro and stronger Asian equity markets. “The rupee movement is triggered by global sentiments, so this trend will continue for now,” Mr Venkatesh said. The rupee is likely to appreciate to about 54 against the US dollar by December, according to a survey of 113 respondents conducted by Royal Bank of Scotland (RBS). About 58 per cent of the market participants in the survey believed that the USD/INR market is trading ‘neutral’.

Call rates and G-Secs

The call money market ended higher at 8 per cent. With higher liquidity in the system, the call rates had closed at 7.95 per cent on Wednesday, lower than the RBI’s policy rate at 8 per cent. The 9.15 per cent government bond maturing in 2024 closed a tad higher at Rs 106.46 (yield: 8.29 per cent) from its previous close of Rs 106.43 (yield: 8.30 per cent) on Wednesday. The 8.15 per cent bond maturing in 2022 closed lower at Rs 100.23 (yield: 8.11 per cent) from a close of 100.31 (yield: 8.10 per cent) yesterday.

(This article was published on July 26, 2012)
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