The rupee strengthened, rebounding from a seven-week low, on speculation that the central bank sold dollars.
The currency advanced for the first time in five days, after dropping as much as 0.8 per cent on concern that the ruling Congress party’s loss in a regional election would derail economic reforms. A weaker currency may worry the Reserve Bank of India (RBI), as oil prices have risen 14 per cent this year and the country imports 80 per cent of its needs, according to Kamlakar Rao, head of foreign exchange trading at Allahabad Bank.
“The market suspects RBI intervention today,” Rao said. “This might lead to a stronger rupee this week.”
The currency advanced 0.2 per cent to 50.29 per dollar in Mumbai, according to data compiled by Bloomberg. It touched 50.76 earlier, the lowest level since January 18. The market would be shut tomorrow for a local holiday.
The Samajwadi Party, which is opposed to foreign investment in the retail sector, won a majority of seats in Uttar Pradesh. Prime Minister Manmohan Singh had pledged in December he would revive a plan to open the industry to companies such as Wal-Mart Stores Inc after the state elections.
Bond settle mixed
Government securities (G-Secs) settled mixed on alternate bouts of buying and selling. The 8.79 per cent G-Sec maturing in 2021 declined to Rs 103.59 from Rs 103.64 yesterday, while its yield inched up to 8.24 per cent from 8.23 per cent. The 8.97 per cent G-sec maturing in 2030 eased to Rs 103.60 from Rs 103.65, while its yield looked up to 8.58 per cent from 8.57 per cent and the 7.83 per cent G-sec maturing in 2018 also quoted slightly lower at Rs 97.65 from Rs 97.67. However, the 9.15 per cent G-Sec maturing in 2024 rose further to Rs 106.70 from Rs 106.64, while its yield softened to 8.28 per cent from 8.29 per cent.
Call rate eases
The call rate eased at the overnight call money market on Wednesday due to lack of demand from borrowing banks. The rate closed lower at 8.90 per cent from yesterday’s close of 9.00 per cent. It moved in a range of 9.00 per cent and 8.65 per cent.