The rupee closed stronger at 63.11 against the dollar, a day after the RBI Governor, Raghuram Rajan, assured that he will not roll back the special dollar swap window for oil companies in a hurry.

In fact, he said, majority of the oil demand is being met through the markets from almost a month now.

“There is no fundamental reason for volatility in the value of the rupee,” Rajan said on Wednesday.

The Indian unit opened higher at 63.15 after closing at 63.31 on Wednesday.

The currency markets will remain closed on Friday on account of a bank holiday.

The rupee has lost more than one per cent in this week.

Rajan said that India’s current account deficit is likely to be lower by $32 billion this year compared to last year.

A higher current account deficit exerts pressure on the local currency as more dollars are required to finance the same.

“The rupee’s gain today was purely because of Rajan effect. Statement makes a big difference to the sentiment,” a chief dealer of a public sector bank said. In intraday trade, the rupee moved between a high of 62.95 and a low of 63.32.

OUTLOOK

Market participants believe that the rupee will trade in the 62.50-63.50 range in the week ahead.

Mohan Shenoi, President -Group Treasury and Global Markets, Kotak Mahindra Bank, said “The RBI has enough instruments to ensure currency market is in order. The market will be calm. It will broadly trade in the range of 62.50-64 per dollar range in November.”

Another dealer of a public sector bank said that the rupee will not fall below 63.50 in the next week, while capping the lower limit at 62.75.

Call rates, G-Sec: The overnight call money rate, the rate at which banks borrow short-term funds from each other, closed higher at 8.70 per cent from the previous close of 8.60 per cent.

Yields on the 10-year benchmark government security (7.16 per cent maturing in 2023) hardened to 9.02 per cent from 8.91 per cent. Bond prices fell to Rs 88.29 from previous close of Rs 88.88.

satyanarayan.iyer@thehindu.co.in

(This article was published on November 14, 2013)
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