The rupee on Thursday rose 13 paise against the dollar to close at a two-month high of 50.25/26, extending its gains for the sixth session in a row, buoyed by capital inflows.
Forex dealers said mild dollar demand from importers, mainly oil refiners, limited the rupee rise. Dealers said sustained fall in dollar value overseas after successful bonds auction by some European countries boosted the rupee sentiment.
It moved between 50.07 and 50.47 at the Interbank Foreign Exchange (Forex) market, before settling up at 50.25/26, up 13 paise, or 0.26 per cent.
FIIs injected over $3 billion in debt market and over $1 billion in stocks in the current month so far, mainly boosting the rupee sentiment, according to Sebi data.
Bonds gain
10-year bonds gained, pushing yields to an eight-month low, on optimism the central bank’s debt purchases will boost demand.
The Reserve Bank of India will offer to buy Rs 12,000 crore ($2.4 billion) of securities tomorrow, according to a statement on January 17. It has bought Rs 61,400 crore of sovereign notes since November to ease a cash crunch in the banking system. Bonds also gained on speculation policymakers, who raised interest rates seven times in 2011, will lower them this year as inflation cools.
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“Regular purchases of securities by the central bank have infused a lot of confidence among buyers and that is keeping yields down,” said Anoop Verma, a fixed-income trader at Development Credit Bank in Mumbai. “A reversal in the monetary cycle is also being factored in.”
The yield on the 8.79 per cent bonds due November 2021 fell two basis points, or 0.02 percentage points, to 8.17 per cent here, according to the central bank’s trading system.
Call rate recovers
Call rate recovered on the overnight call money market due to fresh demand from borrowing banks. It finished higher at 8.75 per cent from yesterday’s closing level of 8.60 per cent, moving between 9.40 per cent and 8.75 per cent.