The rupee ended stronger on Tuesday as some banks sold dollars and the markets derived comfort from a recent decision of the Reserve Bank of India (RBI) to hold interest rates, expecting a fall in inflation going ahead, which prompted some investors to believe that the central bank may be shifting its monetary stance to support growth.
The rupee ended at 61.7950 per dollar, up 0.26%. The unit opened at 61.8350 and touched a high and a low of 61.77 and 61.9675 respectively.
On Tuesday, the currency market trading volume was thin, dealers said. “Some of the custodian banks were selling dollars and foreign institutional investors (FIIs), in general, have a feeling that the RBI is turning more growth-supportive,” said N.S. Venkatesh, treasurer at IDBI Bank Ltd.
So far this year, FIIs have bought domestic equities worth $19.7 billion, while in the previous year they bought $24.55 billion.
The decision of the US Federal reserve to withdraw monetary stimulus on a gradual basis too has come as a positive factor to the financial markets, Venkatesh said. “But we shouldn’t get too much complacent about that,” Venkatesh said.
Since January this year, the Indian currency has weakened 11% and has lost the third most after the Indonesian rupiah and Japanese yen among Asian currencies during that period.
India’s benchmark equity index, the Sensex, ended at 21,032.71 points, down 0.32%.
The yield on India’s 10-year benchmark bond ended at 8.87%, compared with its Monday’s close of 8.816%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 80.530, up 0.10% from the previous close of 80.447.
Source:- livemint.com
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