Erasing morning losses, the rupee recovered from 61.20 levels to end marginally higher on Thursday at 60.85 against the dollar. The recovery was largely due to heavy capital inflows buoyed by US Federal Reserve’s renewed zero-interest pledge and stronger signs of India’s economic and trade ties with China.

The US Federal Reserve on Wednesday retained its guidance that short-term interest rates will remain near zero for a “considerable time” after the bond-buying programme is expected to end next month. The Fed tapered monthly bond buying by $10 billion for the seventh time, staying on course to end the programme in October.

The domestic unit opened weaker at 61.10 as against the previous close of 60.91 due to weaker Asian currencies, which further pushed the rupee lower to 61.20.

Despite weaker Asian currencies, the rupee bounced back on heavy capital inflows and gained to 60.84 towards the end of the trading session.

Investment announcements by China into India boosted market sentiments with BSE-benchmark Sensex ending 480 points (1.8 per cent) higher at 27,112 at day’s close.

Call flat, Bond rates up

The interbank call money rate, the rate at which banks borrow short-term funds from one another, ended flat from Wednesday’s close of 7.95 per cent.

The price and yield on the benchmark 8.40 per cent government security maturing in 2024, closed higher at Rs 99.63 as against Wednesday’s close of Rs 99.34. The yield on the bond softened to an 11-month low of 8.45 per cent from 8.49 per cent.

The yield touched its lowest level since 11 October 2013, and is further expected to soften on hopes of continued interest in the Indian markets by foreign investors.

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