The rupee ended flat at 59.69 on Thursday in a volatile trading session influenced by favourable comments from the US Federal Reserve on the need to continue fiscal stimulus as well as robust dollar demand from oil importers.
The Indian unit swung 62 paise between a high of 59.38 and a low of 60. It opened stronger at 59.39 against the dollar after the Federal Open Market Committee (FOMC) minutes indicated that the much-feared scale-back of $85 billion per month fiscal stimulus might not yet be around the corner. Most members felt the US employment market should be a lot stronger before such winding down, the minutes showed.
US Fed Chief Ben Bernanke said the US central bank will have to be more flexible with monetary policy. In addition, measures introduced by the Reserve Bank of India and the Securities and Exchange Board of India since Monday to curb the rupee volatility seemed to have had the desired effect, at least momentarily.
Among other things, the RBI has directed oil importers to go to only one big bank for their dollar requirements to reduce the volatility created by different quotes on the dollar value generated by different banks. “I think it is a good step the RBI has taken, because the demand is concentrated in one place…so that it is not seen as too much of a demand for dollars. You have seen the impact of it on the rupee,” said K.R. Kamath, Chairman and Managing Director, Punjab National Bank.