Re ends at 46.11 against $
The rupee rose on Tuesday, following as a weaker dollar overseas continued to support the local unit.
By ET Bureau |
MUMBAI: The rupee rose on Tuesday, following as a weaker dollar overseas continued to support the local unit. The dollar hit a 14-month low against a basket of currencies after comments from various central bankers. Dealers said the greenback would continue to come under pressure in the coming days. The rupee ended at 46.11 against the dollar, stronger than its Friday���s close of 46.29.
Last Thursday, the rupee rose to 45.80, its best since September 24, 2008. The dollar index, a gauge of the US units performance versus six majors, was down 0.4% by late evening. Government bond yields came off near six-week highs on Tuesday, amidst thin volumes, as traders braced for another Rs 10,000 crore auction and the monetary policy review next Tuesday.
The yield on the 10-year benchmark bond ended at 7.41%, steady from Friday���s close, after rising as high as 7.43%, its highest since September 11. Financial markets were shut on Monday for a holiday. Dealers said trading would remain rangebound during the week. The government will auction Rs 9,000 crore worth of treasury bills on Wednesday and another Rs 10,000 crore of bonds on Friday.
The Reserve Bank is expected to keep its benchmark lending and borrowing rates on hold in its policy review next Tuesday.
���Surging inflation and hawkish talk from RBI make the next policy announcement a tricky call,��� said Royal Bank of Scotland���s Sanjay Mathur in a note to clients. ���Our assessment is that RBI will start to neutralise excess liquidity in the system by raising reserve requirements later this month. Formal rate hikes are unlikely until the first quarter 2010 and even this tightening cycle is unlikely to be aggressive,��� he added.
Most analysts do not foresee any additional slippage in the FY10 deficit, as data until August shows that fiscal performance has been on track with budget targets. Therefore, they feel there is little merit in persisting with excessive levels of liquidity.
Last Thursday, the rupee rose to 45.80, its best since September 24, 2008. The dollar index, a gauge of the US units performance versus six majors, was down 0.4% by late evening. Government bond yields came off near six-week highs on Tuesday, amidst thin volumes, as traders braced for another Rs 10,000 crore auction and the monetary policy review next Tuesday.
The yield on the 10-year benchmark bond ended at 7.41%, steady from Friday���s close, after rising as high as 7.43%, its highest since September 11. Financial markets were shut on Monday for a holiday. Dealers said trading would remain rangebound during the week. The government will auction Rs 9,000 crore worth of treasury bills on Wednesday and another Rs 10,000 crore of bonds on Friday.
The Reserve Bank is expected to keep its benchmark lending and borrowing rates on hold in its policy review next Tuesday.
���Surging inflation and hawkish talk from RBI make the next policy announcement a tricky call,��� said Royal Bank of Scotland���s Sanjay Mathur in a note to clients. ���Our assessment is that RBI will start to neutralise excess liquidity in the system by raising reserve requirements later this month. Formal rate hikes are unlikely until the first quarter 2010 and even this tightening cycle is unlikely to be aggressive,��� he added.
Most analysts do not foresee any additional slippage in the FY10 deficit, as data until August shows that fiscal performance has been on track with budget targets. Therefore, they feel there is little merit in persisting with excessive levels of liquidity.
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