Re rises 18 paise vs $ to two-week high

The rupee on Monday extended its gains for the third straight session and strengthened by 18 paise at a fresh two-week high of 55.43 against the dollar, following sustained selling of the American currency by exporters and some banks, amid continued capital inflows.

At the Interbank Foreign Exchange (Forex) market, the domestic unit resumed higher at 55.50 a dollar from last weekend’s close of 55.61. It touched a low of 55.92 in the afternoon deals on weakness in stock market and a firm trend in dollar abroad.

However, the rupee bounced back later to settle at the day’s high of 55.43 on dollar selling by exporters and some banks at the rupee’s lower levels.

The rupee also received support from robust capital inflows. FIIs on Monday pumped in Rs 591 crore in stocks, provisional data from stock exchanges showed.

There were a few reports of RBI intervening to help the rupee after it touched the intra-day low but there was no major effort in my view, a treasury official at public-sector bank said.

Bond yields flat
Bond yields were flat as traders waited to see whether the central bank will hold additional bond purchases this week after a pause in the last amid improving liquidity conditions. The Reserve Bank of India (RBI) is set to announce the composition of its bond auction for Friday later in the day, and it might then make an announcement on any OMO, traders said.

Trading volume was at Rs 11,725 crore ($2.10 billion) lower than the average Rs 17,000-18,000 crore seen in the recent trading sessions owing to a RBI settlement holiday on Monday for quarterly closing of bank accounts.