The rupee strengthened for the third consecutive day on Friday, ending 30 paise higher at 61.44 against the dollar after demand for the greenback dampened following failure by US lawmakers to resolve a budget impasse. The move is likely tofurther delay the US Fed’s tapering plan of its $85-billion monthly monetary stimulus. This is expected to restrict dollar outflows from emerging markets such as India. The domestic unit opened weaker at 61.89 against its previous close of 61.74 on higher dollar demand from importers. The rupee declined to 61.93 a dollar in early trade, but soon rallied to 61.26 in the afternoon on substantial capital flows. “The rupee has seen some stability and will strengthen from here on with more dollar inflows expected to come from the FCNR swap and tier-I capital borrowing window for banks,” said N. S. Venkatesh, Head – Treasury, IDBI Bank. By October-end, the rupee may touch 60.50 levels, he added.

Call rates down, G-Secs up

The inter-bank call money rate, the rate at which banks borrow from each other to meet short-term fund requirements, closed at 9 per cent, down 50 basis points from its previous close of 9.50 per cent. The 7.16 per cent government security, which matures in 2023, ended higher Rs 90.61 from its previous close of Rs 90.47. The yields softened a tad to 8.61 per cent from Thursday’s close of 8.63 per cent.

deepa.nair@thehindu.co.in

(This article was published on October 4, 2013)
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