The rupee on Tuesday snapped out of its three-day losing spree and recovered by ten paise to close at Rs 45.42/43 a dollar, following smart rally in local equities and a sluggish dollar overseas. Good news came in from the bonds market as well. India?s benchmark bond due 2020 gaining for the first time in three days on speculation that yields at their highest level in eight months will lure investors.
Yields on the nine-year bond rose 32 basis points this month through Monday. The Reserve Bank of India may increase the reverse repurchase rate, at which it lends to banks, by 25 basis points on January 25, according to four economists surveyed by Bloomberg. ?There is some buying probably because these are good levels to add to your portfolio if you want to hold the securities to maturity,? said Roy Paul, deputy general manager at Federal Bank in Mumbai.
Meanwhile, fresh dollar selling by exporters and some banks further boosted the rupee. At the forex market, the domestic unit that opened near Monday?s close at 45.53/54 a dollar, soon after dipped to the day?s low of Rs 45.57 against the US currency.
The rupee has depreciated by 39 paise or 0.86% in the last three day trading sessions. However, rallying stock market lifted the rupee up to Rs 45.40 a dollar before settling at 45.42/43 against the US dollar. Sensex closed 209.80 points or 1.11% higher while other Asian markets observed a mixed trend.