The rupee reversed some of its initial gains, yet closed stronger at 52.88 against the US currency. Month end demand for the dollar from oil importers reversed some early gains.

The local unit gained to a near five-month high of 52.67 in the opening trade a day after Prime Minister asked the Finance Minister to take steps to arrest the volatility in Indian currency.

The rupee has gained over 250 paise in the past fortnight after the Government announced a slew of measures to boost the market sentiment.

The local unit has also been helped by a weakening dollar against the major currencies, including the euro.

“Along with the global trend of US dollar and improving sentiment in domestic market, we expect the rupee to appreciate further towards 51 levels over the next 3-4 months,” said Bitupan Majumdar, Lead Analyst (Commodity and FX Derivatives) , JRG Wealth Management.

Intraday, the rupee moved between a high and low of 52.49 and 52.88, respectively.

Call rates, G-Secs

The interbank call rates closed unchanged from previous close of 7.95 per cent.

The 10-year benchmark, 8.15 per cent government security, closed higher at Rs 99.99 (yield: 8.14 per cent). It had closed at Rs 99.90 (yield: 8.16 per cent).

The Government’s stand to stick to its earlier announced borrowing programme (through auctioning of bonds) had a positive rub-off on the bond markets.

“We expect borrowing should be in line with budget estimates. Currently, the market is also not expecting higher borrowing while a mild slippage of Rs 15,000-20,000 crore can be possible,” Majumdar said.

(This article was published on September 28, 2012)
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