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The rupee ended marginally strong on Tuesday due to rebound in stocks and as the government's auction of mobile airwaves attracted strong demand. The government received $7 billion worth of total bids on Monday, the first day of the auction and looked set to top its minimum target of raising $1.8 billion initially.
The rupee ended at Rs 62.54 compared with previous close of Rs 62.58 per dollar. The rupee had opened at Rs 62.82 and during intra-day trades it touched a high of Rs 62.51 per dollar.
The rupee also benefited as Asian currencies firmed up later in the session on Tuesday as the region is seen better placed than other emerging markets to face the fallout of any global risk aversion due to the U.S. Federal Reserve's stimulus tapering and concerns of a slowdown in China.
"There have been rumours of fund flows related to the mobile spectrum auction over the last two days. The recovery in stocks also helped the rupee," said Uday Bhatt, a senior manager at UCO Bank.
The Reserve Bank of India (RBI) governor Raghuram Rajan said on Tuesday that India is better prepared to deal with any further US Fed tapering, but the country needs to remain vigilant to face eventualities.
“ We have done a lot to make the economy robust and we are better prepared (to deal with impact of tapering). (But) I will never say we are fully prepared for any eventuality. We have to be vigilant. “We are better prepared certainly now than we were six months ago and that is because of hard work by the government as well as regulators,” Rajan told reporters after the Financial Stability and Development Council (FSDC) meeting.
Rajan also said the new US Federal Reserve chief Janet Yellen is a very experienced central banker. “I have full faith that she will do whatever is appropriate and she will be very reliable central banker,” said Rajan. Most currency dealers see the rupee trading in the range of Rs 62.20 to Rs 63 per dollar tomorrow. According to them the Reserve Bank of India (RBI) will intervene at the level when rupee nears the Rs 63 per dollar mark.
Meanwhile, government bond yields fell on Tuesday pushing the yield to a two-week low, as the government’s borrowing program draws to a close and potentially boosts demand for existing debt. RBI will sell government bonds for a notified amount of Rs 10,000 crore on Friday.
The yield on the 10-year benchmark government bond 8.83% 2023 ended at 8.68% compared with previous close of 8.73%.
