The rupee closed marginally higher at 62.47 against the dollar as the American currency weakened against a basket of currencies after the US Government shut down for the first time in 17 years.

Currency traders remained hopeful that the shut down will delay the end of tapering of the $85 billion monetary stimulus.

“Immediately after this news (of shut down), the US dollar index fell below the key level of 80 against major currencies and rupee started to gain,” said Abhishek Goenka, India Forex Advisors.

The Indian currency opened the day flat at 62.60 from previous close. It moved in a range of 62.15 to 62.60 in the day’s trade.

Provisional data released by the Reserve Bank of India showed that India’s current account deficit widened to 4.9 per cent of the gross domestic product in the quarter ended June 30, 2013 from 4 per cent in the year ago quarter.

This, however, was lower than what the markets were expecting. Also, economists, in their notes have expressed confidence that the CAD for the full year will be capped at $70 billion, or 3.8 per cent of the GDP for the full year, as projected.

A high CAD is detrimental to the currency as a higher gap will require more dollars to fund it.

Call Rates lower; G-Sec up

The inter-bank call money rate, the rate at which banks borrow from each other to meet their short-term fund requirement, closed slightly lower at 9.35 per cent from the previous close of 9.45 per cent.

The 7.16 per cent government security, which matures in 2023, closed higher at Rs 89.90 from the previous close of Rs 89.68. Yields softened to 8.73 per cent from the previous close of 8.77 per cent.

(This article was published on October 1, 2013)
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