A strong euro and heavy dollar selling helped the rupee to gain at 55.77 against the dollar on Friday. It had closed weaker at 55.85 on the US Federal Reserve’s inaction on Thursday.

On Friday, the Indian currency recovered in the second session of the day after opening lower at 56.15 due to a weak euro and Asian markets on the European Central Bank’s (ECB) inaction on fiscal measures for the euro zone.

“The rupee gained as the euro rose by almost 100 basis points after trading weak in the early trade. Also, heavy dollar selling by corporates and foreign banks further boosted the rupee,” said a chief dealer of a nationalised bank.

Hopes of bold actions from the ECB with measures for Spain and Italy’s increasing borrowing costs had run high after the ECB President last week had vowed to do “whatever it takes to preserve the euro’’.

“There might not be any drastic appreciation in the rupee. However, once the rupee breaches 55.20, we may see it gaining to 54 level,” the dealer said.

Call rates and G-Secs

The overnight call rates ended flat at 8 per cent from yesterday. Intra-day, the call money market moved in the range of 7.80 and 8.05 per cent.

With heavy movement in the bond market, the 8.15 per cent government bond, which matures in 2022, closed lower at Rs 99.28 (yield: 8.25 per cent) from Rs 99.51 (yield: 8.22 per cent) on Thursday.

beena.parmar@thehindu.co.in

(This article was published on August 3, 2012)
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