The Indian rupee remained weak against the dollar in thin trade as dealers awaited fresh directions in the local equity market after a strong rise in the Indian currency in the last two weeks.
At 1:20pm, the local currency trading at 58.78, down 0.24% from its previous close of 58.64 after opening at 58.71 a dollar in the morning.
The rupee has gained 3.17% in the last 15 trading sessions rising from 60.22 on 5 May to 58.78 on Wednesday. Since January, the Indian currency has strengthened 5.1% and is the second-biggest gainer in Asia so far after the Indonesian rupiah.
The bounce back in the rupee has been fuelled by dollar inflows from foreign institutional investors in both the local debt as well as equity markets first because of the country’s improving macro-economic prospects and later on hopes of a business-friendly and stable government.
The Bhartiya Janata Party (BJP) managed to get a majority on its own in the country’s lower house, leading to expectations that decision making will quicken and businesses will flourish.
“The fuel that so far has pushed the rupee higher is over, now the market is looking for fresh cues,” said a dealer with a state-owned bank adding that what the new government manages to do in its first budget announcement likely next month will form the basis of a further move.
A weak local stock market also pressured the rupee on Wednesday. The 30-share BSE Sensex fell 0.51% to 24,253.10 points while the National Stock Exchange’s (NSE’s) broader 50-share Nifty index lost 0.47% to 7,241.65 points.
The dollar index, which measures the US currency’s strength against major global currencies, was trading at 79.916, against its previous close of 80.041.
The yield on the 10-year government bond trading at 8.786%, from its previous close of 8.856%. The inter bank call money rate was trading at 7.9%.
Source:- livemint.com
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