The rupee failed to sustain gains after breaching the 62 level against the dollar on Tuesday but still ended five paise higher at 62.37, as banks and exporters sold the US currency amid foreign capital inflows into the equity market.
Weakness in the dollar overseas also boosted the rupee, a forex dealer said. The rupee resumed higher at 62.20 per dollar from the previous close of 62.41 at the interbank foreign exchange market and rose to 61.87 per dollar. The initial gains were trimmed on fag-end dollar demand from banks and importers and the local currency ended at 62.37 per dollar, a gain of five paise or 0.08%. The rupee has moved up 135 paise in the past four sessions.
In the global market, the dollar pared losses against other major currencies yesterday as investors considered when the Federal Reserve would start scaling back its bond-buying programme. Analysts expect Federal Reserve chief Ben Bernanke to favour retaining the $85 billion a month stimulus programme at a speech later on Tuesday. The minutes of the Federal Open Market Committee meeting in October are expected to be released on Wednesday.
“Rupee was seen surpassing another key level of 62 against the US dollar today on the back of consistent speculation that the Fed will continue its ongoing quantitative easing,” said Abhishek Goenka, CEO of India Forex Advisors, on Tuesday.
Bonds up for 2nd day
Mumbai: Bonds rose for a second straight session on Tuesday tracking a rally in the rupee , although 10-year bonds gained only marginally after RBI announced it would issue new benchmark debt at its weekly auction on Friday.
The 8.28% 2027 bond, which was the most heavily traded in the session, ended down 10 basis points, at a near two-week low of 9.017%. Buying in 2027 bonds was
also spurred by investors switching out of 2023 bonds that will soon lose their benchmark status given the RBI plans to sell R7,000 crore of new 10-year bonds as part of its R15,000-crore auction on Friday. The soon-to-be-issued 10-year bond yield closed at 8.70% in the when-issued segment on the electronic trading platform.