The rupee edged higher on Tuesday as gains in the euro and lower demand for dollars from oil firms helped offset falls in domestic shares as the impact of the strong showing by the key opposition party in state elections started to fade.
“The rupee should continue to remain range-bound in the near-term. There is good buying coming in at sub-61 levels from all counters including oil, ECB hedging as also other regular demand,” said Ashtosh Raina, head of foreign exchange trading at HDFC Bank.
The partially convertible rupee closed at 61.04/05 per dollar compared to 61.13/14 on Monday. The unit moved in a range of 60.97 to 61.2950 during the day. In the offshore non-deliverable forwards, the one-month contract was at 61.44 while the three-month was at 62.31.
Bonds end eight days of losses
Government bond prices rose on Tuesday on bargain-hunting after slumping for eight consecutive sessions, although some caution prevailed ahead of key inflation data later this week.
The 8.83% 2023 bond, which became the Reuters benchmark 10-year paper effective Monday, ended six basis points lower at 8.84%. The old benchmark 10-year also dropped six basis points to end at 9.17%.
In the overnight indexed swap market, the benchmark five-year swap rate closed 3 bps lower at 8.40%, while the one-year rate ended 3 bps lower at 8.45%.