Touching a two-month high on Friday, the rupee ended almost flat at 61.27 against the dollar due to robust domestic equity markets and stronger capital inflows.
BSE-benchmark Sensex ended higher by 467.38 points (2.29 per cent) at 20,882.89 points. Persistent selling of the dollar by banks and exporters on the back of sustained capital inflows from foreign funds helped the rupee.
The domestic unit opened at 61.17, 6 paise stronger from Thursday's close of 61.23 per dollar on mild dollar selling by banks and exporters. It got a further boost after Life insurance Corp of India (LIC) Chairman S K Roy stated in an interview report that LIC would invest Rs 40,000 crore in the domestic equities in fiscal 2014.
In the morning trading session, the rupee appreciated to a two-month high of 60.92, its highest level since August 8.
However, it fell sharply to 61.71 after reports that the Government is considering to close the dollar swap window offered to oil companies.
Later, the RBI came out with a statement refuting the reports. “The OMC swap window remains operational. Any tapering of the window, as and when it occurs, will be done in a calibrated manner, the RBI said in a statement.
This led a recovery in the rupee to 61.30 levels moving 79 paise during the day.
In addition, the dollar fell yesterday as US lawmakers reached a deal to avoid debt ceiling default and ended the 16-day partial government shutdown, which provided a breather to the rupee. The shutdown has caused billions of dollars in losses.
Call Rates and G-Secs
The inter-bank call money rate, the rate at which banks borrow from each other to meet their short-term fund requirements, closed a tad weaker at 8.85 per cent against the previous close of 8.95 per cent.
The 7.16 per cent government security, which matures in 2023, ended stronger at Rs 91.01 against the previous close of Rs 90.70.
The yields softened to 8.55 per cent from 8.60 per cent. Bond yields and prices move in opposite directions.