The rupee closed a tad higher at 59.77 against the dollar (previous close: 59.80) as the currency markets remained cautious ahead of the first Union Budget of the new Government. In intra-day trade, the rupee touched a high of 59.67 and a low of 59.93.

According to analysts, a credible roadmap to reduce the fiscal deficit might help the rupee gain past 59, as more foreign currency might pour in. If the Budget fails to deliver on expectations, market players believe a quick flight of capital will hurt the currency in the short run. The Railway Budget presented on Tuesday had said that the Government plans to spend Rs 65,450 crore ($10.95 billion) on railways in 2014-2015. The Railway Minister had pointed out that total investment in railways expected through public-private partnerships would be Rs 6,005 crore by March-end next year.

The Minister had also said that maximum financial outlay will be made for completing the ongoing projects within this year and also endorsed the previous United Progressive Alliance (UPA) Government’s proposal of bringing foreign direct investment (FDI) into all areas of railways, except operations. This boosted the hopes of positive reforms for the country.

Call rate dips, bond yields flat

The inter-bank call money rates, the rate at which banks borrow short-term funds from each other to tide over liquidity mismatches, ended lower at 8.75 per cent from the previous close of 9 per cent. The benchmark 8.83 per cent Government security which matures in 2023, also closed flat at ₹100.63. Yields were flat at 8.72 per cent.

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