BackRupee closes 5 paise stronger at 63.25 per dollar
The rupee gave up most of the early gains on consistent dollar buying by state-owned banks even as volumes were low
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Mumbai: The rupee on Monday gave up most of its early gains against the US dollar on consistent dollar buying by state-owned banks even as volumes were low as many dealers were on leave for Christmas.
The local currency opened at 63.31 and touched a high and a low of 63.14 and 63.32, respectively. The rupee closed at 63.25 a dollar, up 0.08% from its previous close of 63.30.
“The rupee has strengthened earlier because some foreign banks were selling dollars on behalf of their clients, but since then state-owned banks have taken over and it looks like they are buying on behalf of the central bank which is attempting to recoup some of the dollars it sold last week," said a dealer with a private bank.
The Reserve Bank of India (RBI) sold dollars last week in an attempt to prevent the rupee from falling sharply as emerging market currencies were under pressure due to a fresh bout of risk aversion.
Dealers said the rupee’s movement is also exaggerated at the end of the year because volumes are low. Expectations are that the Indian currency will also be supported by inflows from deals like the $700 million investment into local e-commerce company Flipkart.
Since the beginning of this year, the rupee has weakened 2.29% against the dollar, despite foreign institutional investors (FIIs) having bought $16.45 billion from local equity markets and $26.18 billion from the debt market.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 89.495, down 0.11% from its previous close of 89.598.
Investors will be watching the progress of Parliament session that ends 23 December and the results of the five-phase elections of Jharkhand and Jammu and Kashmir Assembly to be announced the same day for further cues on the markets.
India’s benchmark equity index, S&P BSE Sensex, closed at 27,701.79 points, up 1.21%.
The yield on India’s 10-year benchmark bond stood at 7.96%, unchanged from its Friday’s close.
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