Rupee ends 7-day falling streak
After a gap of several days, the rupee took a break from its falling routine and posted gains on Wednesday.
By ET Bureau |
MUMBAI: After a gap of several days, the rupee took a break from its falling routine and posted gains on Wednesday. However, this is the second week in a row that the currency posted weekly losses, as a slide in global stocks fuelled concerns foreign investors would step up equity sales. Liquidity was comfortable, with banks parking more than Rs 9,000 crore with the Reserve Bank of India (RBI), although overnight call money rates closed higher. Bonds dealers are expecting interest rate cuts any moment now. Bonds rose on these hopes.
The rupee ended at 50.04 against the dollar, 0.3% stronger than 50.18 at close on Thursday, when it hit a record low of 50.60 during trade. Stock market benchmark BSE Sensex snapped a seven-day losing streak and rose 5.5% on late buying by large domestic funds. Foreign funds have sold a net $13.5 billion of Indian stocks this year, after buying $17.4 billion in 2007.
���The upward movement in the rupee was also because of dollar losing against the major world currencies,��� says the head of fixed income at a local MF. He said that the dollar fell dramatically in the non-deliverable forwards market, reducing the arbitrage opportunity. However, he said that the outlook for the rupee still remains subdued.
Overnight cash rates closed slightly higher on Friday after outflows toward treasury bill auctions drained some funds from the system and due to borrowing by banks for fresh auctions earlier in the day. Call rates closed at 6.25%, higher than Thursday���s close of 6.20%. However, banks parked Rs 9,220 crore with the central bank through its daily twin money market operations, indicating sufficient cash supplies with banks.
The government sold Rs 7,000 crore worth of treasury bills and another Rs 9,000 crore of bonds this week. The money leaving the system on account of the latter is to be compensated by the buyback of short dated MSS bonds that took place earlier in the week.
Bonds rose, as dealers say that it is only a matter of time before RBI announces a cut in rates. Yields of the 10-year government securities fell to 7.19% reflecting the bullishness in the market.
The rupee ended at 50.04 against the dollar, 0.3% stronger than 50.18 at close on Thursday, when it hit a record low of 50.60 during trade. Stock market benchmark BSE Sensex snapped a seven-day losing streak and rose 5.5% on late buying by large domestic funds. Foreign funds have sold a net $13.5 billion of Indian stocks this year, after buying $17.4 billion in 2007.
���The upward movement in the rupee was also because of dollar losing against the major world currencies,��� says the head of fixed income at a local MF. He said that the dollar fell dramatically in the non-deliverable forwards market, reducing the arbitrage opportunity. However, he said that the outlook for the rupee still remains subdued.
Overnight cash rates closed slightly higher on Friday after outflows toward treasury bill auctions drained some funds from the system and due to borrowing by banks for fresh auctions earlier in the day. Call rates closed at 6.25%, higher than Thursday���s close of 6.20%. However, banks parked Rs 9,220 crore with the central bank through its daily twin money market operations, indicating sufficient cash supplies with banks.
The government sold Rs 7,000 crore worth of treasury bills and another Rs 9,000 crore of bonds this week. The money leaving the system on account of the latter is to be compensated by the buyback of short dated MSS bonds that took place earlier in the week.
Bonds rose, as dealers say that it is only a matter of time before RBI announces a cut in rates. Yields of the 10-year government securities fell to 7.19% reflecting the bullishness in the market.
Too busy to trade in stocks? Invest in Mutual Funds with ET Money!
Bookmark or read stories offline -
Download ET Markets APP
Download ET Markets APP
ADVERTISEMENT
