The rupee ended near a two-week high against the US dollar today as banks sold the greenback, noting a persistent fall in international crude oil prices and a firm local share market. The Indian unit ended at 42.05 against the dollar, up from 42.24 on Tuesday, after moving in a range 41.90-42.12 today.
“Oil prices retracing from $147 a barrel to $118 and a general rise in stock markets have helped the rupee,” said K Rajram, the head of forex risk management at Arvind Mills.
The crude oil price hovered around $119 a barrel on the New York Mercantile Exchange today, down $6 from Friday, and $28 from the record high last month.
According to dealers, a large UK bank, a private bank and a big US bank were among the major sellers of the greenback today at 42.04 for exporters.
Some banks sold dollars and took trading positions amid receding crude oil prices, which lifted the rupee to 41.90, a near two-week high, dealers said.
On Tuesday, the US Federal Open Market Committee kept the target rate for federal funds unchanged at 2 per cent and said inflation may moderate this year, which also boosted sentiment for shares globally. A rise in the local share market triggered some banks to sell dollars for foreign institutional investors (FIIs), dealers said.
Forward premia ended up as importers and banks bought forward dollars noting a rise in the spot rupee, dealers said.
“Some importers were paying today tracking the firm spot rupee. They found the rupee levels attractive to buy forward dollars “ said a dealer of a European bank.
Gilts: Prices dip
Government bond prices ended down nearly 35 paise today because most banks trimmed gilt holdings to lighten positions ahead of the Rs 10,000-crore gilt auction on Friday.
The Reserve Bank of India will auction Rs 6,000 crore of 8.24 per cent, 2018 bond, and Rs 4,000 crore of 7.95 per cent, 2032 bond through a uniform pricing method on Friday.
There was talk that the yield on the 10-year benchmark 8.24 per cent, 2018 bond falling below 9 per cent since Monday was exaggerated ahead of large supply of bonds this week.
Since Monday, the yield on the 2018 bond has come off by 20 basis points.
Today, the 2018 bond ended at Rs 95.03 or 9.01 per cent yield-to-maturity, compared with Rs 95.25 or 8.96 per cent on Tuesday.
Call: Up past 9%
The call money rate ended firm around 9.20 pe cent today because the liquidity in the banking system remained tight, as indicated by banks’ borrowing through RBI’s repo tender.
