The rupee recorded its biggest gain in two months on Thursday on the back of capital inflows and dollar sales by exporters. On Thursday, the Indian currency ended at Rs 54.83 against the dollar, compared to Tuesday’s close of Rs 55.46. During the day, it also touched a high of Rs 54.78 per dollar.
Wednesday was a bank holiday on the occasion of Guru Nanak Jayanti. According to the Securities and Exchange Board of India (Sebi) data, net investments by foreign institutional investors (FIIs) were $243.26 million, compared with $53.82 million on Tuesday.
“Inflows from the telecom sector, sentiment booster from the global markets, and the expected positive developments on the foreign direct investment front helped the rupee soar,” said Ashutosh Raina, head of forex trading, HDFC Bank. The rupee had opened at Rs 55.55 per dollar on Thursday.
On Tuesday, global rating agency Moody’s had said that India’s outlook is stable. This also contributed to capital inflows. “India’s Baa3 rating and stable outlook are supported by credit strengths which include a large, diverse economy, strong GDP growth and savings, and investment rates that exceed emerging market averages,” the global rating agency said in its ‘Credit Analysis on India’ report, released on Tuesday. However, there are slight chances of the rupee weakening from current level on Friday.
Bonds react downward
Government bonds reacted downwards on fresh selling pressure from banks and companies. The 8.15 per cent government security maturing in 2022 declined to Rs 99.63 from Rs 99.73 previously, while its yield moved up 8.21 per cent from 8.19 per cent. The 8.20 per cent government security maturing in 2025 dropped to Rs 98.92 from Rs 99.04, while its yield gained to 8.34 per cent from 8.32 per cent.
Call rates recover
Overnight money rates recovered at the money market here on Thursday on good demand from borrowing banks. The rate finished higher at 8.05 per cent from 7.95 per cent previously.