Forex dealers said that fresh sale of dollars by exporters and banks on the back of fall in dollar value in the New York market yesterday after Federal Reserve policy makers unanimously agreed to maintain low rates and their bond buying programme, supported the rupee in early stages.
The capital inflows have helped bring back confidence, said Vishnu Varathan, a Singapore-based economist at Capital Economics (Asia) Pte. The interest-rate increase didnt have much impact on the currency when it was announced as people were more concerned about the current-account deficit, he said.
The 11-year bonds gained for a second day on speculation yields near their highest level since 2007 will lure buyers. There is some demand because these are good levels to buy, said AY Shedshale, Mumbai-based deputy general manager at Bank of Maharashtra.
Some investors had factored in a 50 basis-point increase in rates to curb inflation before the policy. The yield on the 8.08% bond due August 2022 fell 2bpsto 8.18% on Friday.