The rupee strengthened for the second consecutive day to close 80 paise higher at 65.71 against the dollar on strong capital inflows and dollar selling by banks. The domestic unit opened weaker at 67.07 against Thursday’s close of 66.58 on month-end dollar demand from banks and oil importers. It declined to 67.43 in the first session of trading, after which the RBI intervened by asking public sector banks to sell dollars to prop up the rupee. The Indian currency gyrated in the 65.50 and 67.43 range moving about 193 paise during the day. In addition, heavy capital inflows into the domestic equity market supported the rupee. The BSE-benchmark Sensex ended nearly 220 point higher (1.19 per cent) at 18,219 points at day’s close. “Robust capital inflows from a large corporate and some RBI intervention supported the rupee,” said a dealer with a public sector bank. The rupee has seen sharp movements this week, moving about 8 per cent. It hit a historic low of 68.80 against the US dollar on August 28. It has dropped 3.7 per cent this week alone. Rajiv Takru, Secretary - Financial Services, Ministry of Finance, said, “Rupee depreciation is not reflective of any weakness in the economy…the rupee is heavily under-valued at the moment for reasons everybody knows and it’s being addressed.”

Call rates, G-Secs

The inter-bank call money rates, the rates at which banks borrow money from each other to meet their short-term fund requirements, opened higher at 10.45 per cent from their previous close of 10.25 per cent. The 7.16 per cent government security, which matures in 2023, ended stronger at Rs 90.65 from the previous close of Rs 89.45. Yields softened to 8.60 per cent from 8.77 per cent.

Beena.parmar@thehindu.co.in

(This article was published on August 30, 2013)
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