Snapping a three-day downward move, the rupee on Wednesday ended six paise higher at 61.59 versus the dollar on hopes that weak US jobs data would result in the Fed extending its economic stimulus.
However, the hefty initial gains of the rupee, which had jumped to 61.05 intra-day, were substantially erased on month-end demand for US dollars from private oil firms and some defence-related purchases, amid fall in domestic stocks.
The rupee resumed sharply higher at 61.10 per dollar as against the last closing level of 61.65 per dollar at the Interbank Foreign Exchange (Forex) Market and moved up further to 61.05 per dollar.
However, the rupee failed to maintain initial gains and ended at 61.59 per dollar, clocking a marginal gain of six paise or 0.10 per cent from its last close. The rupee had fallen by 42 paise or 0.69 per cent in previous three days.
“Rupee was seen opening on a very strong note supported by dollar weakness and a rally in global stock markets.
However, later during the day dollar demand by private oil company and by defence put pressure on the rupee. In addition to this, Indian stock markets were seen trading in red,” said Abhishek Goenka, Founder & CEO, India Forex Advisors.
US data showed yesterday that employers there added 148,000 workers in September - lower than the 170,000-180,000 jobs estimated by experts. This spurred speculation that the US Federal Reserve will not cut economic stimulus this year.
The $85-billion-a-month stimulus has led to a surge of capital inflows into emerging markets like India.
Meanwhile, the Indian stock market benchmark Sensex dropped by 97.09 points or 0.47 per cent to end at nearly one-week low of 20,767.88.
Crude oil prices extended their losses in Asian trade today as dealers focused on rising stockpiles that indicate weak demand in the world’s biggest economy, analysts said. New York’s main contract, West Texas Intermediate (WTI) for delivery in December, slipped 16 cents to $98.14 a barrel.
Bonds turn bearish, call rate also ends lower
The government securities (G-Sec) turned bearish on selling pressure from banks and corporates, while the call money rates ended lower at the overnight call money market here today due lack of demand from borrowing banks.
The 7.16 per cent government security maturing in 2023 declined to Rs 90.5350 from Rs 90.6875 previously, while its yield gained to 8.63 per cent from 8.61 per cent.
The 8.28 per cent government security maturing in 2027 dropped to Rs 95.11 from Rs 95.30, while its yield moved-up to 8.90 per cent from 8.87 per cent.
The 7.28 per cent government security maturing in 2019 also fell to Rs 93.6150 from Rs 93.6575, while its yield edged-up to 8.74 per cent from 8.73 per cent.
The 8.12 per cent government security maturing in 2020, the 7.17 per cent government security maturing in 2015 and the 8.30 per cent government security maturing in 2042 were also quoted lower at Rs 96.35, Rs 98.19 and Rs 91.77, respectively.
The Overnight call money rate ended lower at 8.98 per cent from 9.00 per cent yesterday. It moved in a range of 9.05 per cent and 8.90 per cent.
The Reserve Bank of India (RBI) under the Liquidity Adjustment Facility (LAF) purchased securities worth Rs 408.06 billion in 65-bids at the one-day repo auction at a fixed rate of 7.50 per cent, while its sold securities worth Rs 5.00 billion from 1-bid at the One-day reverse repo auction at a fixed rate of 6.50 per cent in the evening auction.