The rupee pared initial gains to close at 54.61 against the dollar due to demand for the American currency from oil importers and banks. It had jumped 27 paise to close at 54.49 on Monday.

On Tuesday, the Indian unit opened higher at 54.38 and touched an intra-day high of 54.34 on the back of positive domestic and Asian equity markets on increased capital inflows. Also, onshore forward premiums rose after the Reserve Bank of India (RBI), which in anticipation of dollar shortages, said it would start a special window to provide exporters dollar credit.

Higher capital inflows into the domestic equity markets were driven by Government announcement on Monday to defer the controversial General Anti-Avoidance Rules (GAAR) implementation to April 2016 and lower wholesale inflation data that raised hopes of a rate cut by the Reserve Bank of India.

However, the rupee surrendered gains during the day and fell to 54.70 to the dollar on the Interbank Foreign Exchange market.

Rate cut hopes by the RBI, as hinted in the central bank’s pre policy review, is likely to boost the rupee sentiments in the week ahead.

Call Rates and G-secs

The interbank call money rates ended slightly lower at 8.05 per cent from Monday’s close of 8.10 per cent. Intra-day, it moved between 7.95 per cent to 8.15 per cent range.

The 8.15 per cent Government security, which matures in 2022, was trading lower at Rs 102.08 (yield: 7.83 per cent) from its previous close of Rs 102.29 (7.80 per cent).

(This article was published on January 15, 2013)
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