The rupee strengthened against the dollar to close at 61.47 due to dollar selling by banks and exporters and a weaker American currency.

Mild foreign capital inflows also boosted the rupee against the dollar, said a forex dealer.

The domestic unit opened almost flat at 61.58/$ against Wednesday’s close of 61.59. The unit declined to 61.70 due to weaker domestic equity markets. The BSE-benchmark Sensex ended marginally lower, by 42 points (0.20 per cent), at 20,725 points.

Dollar selling by banks and importers pushed the rupee upwards to 61.35 in intra-day trade.

In addition, weak US jobs and trade data on Wednesday continued to weigh on the dollar, thereby lifting the rupee.

“Overall, the rupee moved in a narrow range. There were not much flows and the market is waiting for cues from the central bank on the policy day on October 29,” said N. S. Venkatesh, Head-Treasury, IDBI Bank.

The market is expecting the RBI to hike the repo rate (rate at which banks borrow short-term funds from the RBI) and cut the Marginal Standing Facility rate, each by 25 basis points.

Call rates, bond yields ease

The10-year benchmark 7.16 per cent government security, maturing in 2023, closed higher at Rs 90.82 from Wednesday’s close of Rs 90.53, while the yield softened to 8.58 per cent from 8.63 per cent. Bond prices and yields move in opposite directions.

The overnight call money rate ended slightly lower at 8.95 per cent from its previous close of 8.98 per cent on Wednesday. During the course of trading, it moved in the 8.90-9.05 per cent range.

Beena.parmar@thehindu.co.in

(This article was published on October 24, 2013)
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