Rupee ends at 53.47 vs dollar

Beena Parmar Mumbai | Updated on September 21, 2012













The rupee on Friday jumped to a four-month high of 53.47 against the dollar after the government slashed tax on overseas borrowing by local companies to 5 per cent from 20 per cent earlier.

Finance Minister P Chidambaram announced today that the reduced tax will apply to funds borrowed between July 2012 and June 2015. The withholding tax liability on Indian companies would also be reduced to 5 per cent, he said.

The domestic currency had opened stronger at 54.20 per dollar from a weaker close of 54.38 on Thursday on stronger domestic and Asian equity markets. Intra-day, it gained 108 paise against the dollar hitting a high of 53.30 on the overseas borrowing norms announcement and hopes of further reforms next week.

“Lowering of the external commercial borrowing costs for local firms will help more inflows aiding the rupee to rally,” said a chief dealer at a nationalised bank.

“The government’s firm stand on reforms measures will continue to support the rupee. Further, monetary easing measures by central banks such as US, Europe and Bank of Japan are also easing risk sentiments strengthening foreign inflows,” said Bitupan Majumdar, analyst at JRG Wealth Management.

“We see the rupee strengthening to 52.50 levels by end next week. However, lack of political clarity might put some pressure in the months ahead,” Majumdar said.

Call Rates lower; G-Secs eases

The overnight call money rates declined to 7.95 per cent on Friday. It had opened marginally higher at 8.10 per cent from its previous close of 8.08 per cent.

The 10-year benchmark 8.15 per cent government security maturing in 2022 ended a tad softer at Rs 99.87 (yield: 8.17 per cent) from a close of Rs 99.91 (yield: 8.16 per cent) on Thursday.

Published on September 21, 2012

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