Rupee up 8 paise at 61.24 against dollar

Our Bureau Updated - October 30, 2013 at 07:04 PM.

rupee

Paring initial losses, the rupee strengthened to 61.24 against the dollar on Wednesday due to heavy foreign capital inflows and comments on diesel price hike that could reduce fiscal deficit concerns.

A government panel recommendation to increase diesel prices could help reduce some concerns over fiscal deficit.

“India should immediately raise diesel prices by about 9.5 per cent or Rs 5 a litre, a government panel said on Wednesday, along with other measures aimed to cut the government’s huge oil subsidy bill.

According to a public sector dealer, the rupee is likely to see some support with the country’s finances expected to be better placed with a hike in diesel prices. “The rupee further got a boost after the RBI Governor on Wednesday said that another tightening of interest rates from here on could also lead to over-tightening, indicating no further rate hike expected in the next policy,” the dealer said.

The domestic unit opened 8 paise weaker at 61.40 per dollar from Tuesday’s close of a near 11-day high of 61.32 on RBI’s balanced policy.Intra-day, the unit moved in the 61.57 to 61.23 per dollar range.

On Tuesday, the RBI increased the policy repo rate to 7.75 per cent and cut the marginal standing facility (MSF) rate to 8.75 per cent, as was widely expected. It also opened the 7-day and 14-day term repo window to ease liquidity for banks, thereby supporting the market.

The focus will now shift to the Fed policy meet which is likely to be a non-event, the dealer said.

“If the Fed does not announce any specific information on QE tapering, then nothing will actually happen but if they do, or even hint at a move to taper the QE, the impact could be dramatic," said Abhishek Goenka, Founder and CEO, India Forex Advisors.

Call Rates and G-Secs

The yield on the 10-year benchmark government bond 7.16 per cent 2023, softened to 8.57 per cent as compared with 8.59 per cent. The bond price ended higher at Rs 90.90 from Tuesday’s close of Rs 90.75.

The overnight call money rate, rate at which banks borrow from each other for their short-term funding requirements, closed flat from Tuesday’s close of 8.70 per cent.

beena.parmar@thehindu.co.in

Published on October 30, 2013 10:40