Opening at 43.70/72, the Indian unit tested a high of 43.63/64 on the back of substantial inflows of the greenback in the equity market, as well as strong selling by banks on behalf of exporters.
The Economic Surveys stance that a strong rupee would be key to containing inflation in the short-to-medium term, added to the bullish sentiments of the market, even as the RBI stayed away during morning trades.
Exporters sold heavily, cashing-in on the central banks absence in morning trades, said a private bank dealer. However, the central bank entered the market when the rupee touched the 43.63/64 level, mopping-up dollars, till the rupee reached 43.72.
The market expects the forthcoming Budget to announce opening up of several sectors for FDI, which would lead to additional dollar influx. Concerned over a widening trade deficit, the central bank has been absorbing dollars to keep it from gaining on strong capital inflows, said the dealer.
Meanwhile, forward premiums remained range-bound, in the absence of any big-ticket deals, said a dealer. The six-month annualised premium payable in August ended at 1.62% against the previous close of 1.61%, while the 12-month annualised premium payable in February ended at 1.41% against Thursdays close of 1.43%.
At the overnight call money market, the call rates staddled around the reverse repo rate of 4.75% amidst adequate liquidity. The Reserve Bank of India mopped up Rs 26,575 crore by accepting 43 bids at three-day reverse repo at a fixed rate of 4.75%
The government bond market discounted the low inflation rate of 5.01% for the week ended February 12 and a positive stance of the Economic Survey.
The G-Sec market remained steady with most traders staying on the sidelines ahead of the announcement of the Union Budget on Monday, even as select long-term papers attracted some buying support, said a primary dealer. The total traded volume in the government securities market was around Rs 2,500 crore.
The benchmark 10 year gilt, ended the day at an yield of 6.50%, unchanged from the previous close. Intraday, it tested an yield of 6.48%.