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The rupee strengthened against the dollar on Wednesday on improved risk appetite and dollar sales by foreign banks, apart from corporate inflows, and bond yields fell ahead of the Reserve Bank of India’s (RBI’s) monetary policy review decision on Thursday.
The currency opened at 82.08 a dollar as against Monday’s close of 82.33 due to weaker job data in the US and went on to touch 81.92 levels on corporate inflows. Markets were closed on Tuesday on account of Mahavir Jayanti. “Rupee made a bullish start to the day at 82.08 levels as compared to the previous close of 82.33 levels driven by softer dollar, cooling of US labour market and feeble data releases,” Ritesh Bhansali, vice-president, Mecklai Financial Services, said.
“After making day’s high of 82.205 in the first half of the trading session, rupee made a swift move to 81.90 levels, aided by rumoured corporate inflows. Tailwinds continued to blow on the rupee with positive local bourses also running in favour of the local unit for it to mark a close around the levels of 82,” he said. The 30-share Sensex was up 582.87 points or 0.99 per cent on Wednesday.
The rupee closed the day at 82 a dollar, up 33 paisa from the previous close – its highest level in over three weeks. The Indian unit which weakened around 8 per cent in 2022-23, has gained 0.9 per cent in 2023 so far.
“The dollar looks vulnerable against the rupee as premiums rise and dollar index falls. A range of 81.60 to 82.30 can be seen tomorrow [Thursday] as we approach another holiday on Friday and MPC rate decision hiking rates by possibly 25 bps,” said Anil Kumar Bhansali, head, Treasury Finrex Treasury Advisors LLP.
The yield of the 10-year benchmark government bond fell 3.8 bps to close the day at 7.27 per cent. The RBI is widely seen to increase the policy repo rate by another 25 bps, though a section of the market see it as a close call. The central bank has already increased the rate by 250 bps since May to 6.5 per cent. Most analysts expect the central bank to pause after Thursday’s rate increase.
