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The rupee ended strong on Monday due to dollar sale by custodian banks. According to currency dealers, the sale may have been due to mobile phone operators bidding for spectrum in the auction.
The rupee ended at 62.58 to a dollar compared with the previous close of 62.66. The Indian currency had opened at 62.71 and during intra-day trades touched a high of 62.56 and a low of 62.79 against the greenback.
On Monday, the rupee snapped two consecutive sessions of losses. However, the appreciation in the Indian currency may be short-lived as concerns on domestic growth and fears of further tapering by the US still lingers.
“Tomorrow, the rupee may trade in a range of 62.50 to 62.90 per dollar. The Reserve Bank of India (RBI) may intervene if the rupee breaches the 62.90-per-dollar-mark. In case the rupee strengthens beyond the 62.50-per-dollar mark, it can even touch 62 per dollar,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.
“Though there is still a pressure on the currencies of emerging markets, USD/INR was sold off in anticipation of the 2G auction results," said Pramod Patil, assistant vice-president at United Overseas Bank.
The government is expecting to garner $1.8 billion in spectrum sale as it seeks to fund its current account gap. Meanwhile, government bond yields fell on Monday as the Street was expecting the last auction of bonds for a notified amount of Rs 10,000 crore may be cancelled due to comfortable cash balances of the government.
The yield on the 10-year benchmark government bond 8.83 per cent 2023 bond ended at 8.74 per cent, compared to the previous close of 8.77 per cent. After market hours last Friday, auction for a notified amount of Rs 10,000 crore was announced. According to bond dealers, due to this, there may be some correction on yields Tuesday.
