The rupee gained 6 paise to close at 58.71 against the dollar on Wednesday of the last day of the US Federal Reserve’s two-day meeting on the monetary policy.

The domestic unit opened a tad higher at 58.74 from its all-time low close of 58.77 on Tuesday as it stayed volatile on the uncertainty ahead of the US central bank’s decision on quantitative easing programme.

The US Fed had earlier hinted at scaling down its stimulus programme, and this is likely to trigger outflows from India thereby putting pressure on the rupee.

The rupee gained to 58.62 in the morning session of trading and dropped to an intra-day low of 58.91 per dollar on dollar selling by importers and banks.

The currency also continues to face challenges from India’s rising current account deficit (CAD) and macroeconomic indicators, said dealers.

Uday Kotak, Vice Chairman and Managing Director, Kotak Mahindra Bank said, “In the short term it all depends on what the Fed decides in its meeting as it will have significant impact on global markets and therefore on us.”

“Also, we have to find sustainable solution to our CAD and its long term improvement. In the long run, we must make our exports more competitive and at the same time imports must be less competitive. Indian manufacturing is the key to future competitiveness,” Kotak added.

Call rates and G-Secs

The interbank call money rates closed a slightly lower at 7.25 per cent from the previous close of 7.28 per cent.

The 8.15 per cent government security (G-Sec), which matures in 2022, ended marginally lower at Rs 104.39 from the previous close of Rs 104.32. Yields softened a bit to 7.47 per cent from the previous close of 7.48 per cent.

The new benchmark 7.16 per cent G-Sec which matures in 2023, closed higher at Rs 99.27 from a close of Rs 99.15. The yields softened to7.26 per cent from 7.28 per cent.

(This article was published on June 19, 2013)
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