Rupee gains as stocks surge, yields vlimb

The rupee strengthened on Friday as shares jumped on the back of a global risk rally fuelling hopes for foreign fund inflows, but ended off the day’s highs as the euro took a breather in its rise versus the dollar.

The partially convertible rupee closed at 49.1550/1650 per dollar, 0.4% stronger than the previous close of 49.34/35. It had briefly touched a one-week high of 49 in early trade.

Traders said the rupee retreated from the day’s high tracking the euro and as some state-run banks stepped up dollar purchases to make payments likely towards government’s defence purchases.

The euro paused in its climb against the dollar on Friday as investors were hesitant to add to the single currency’s upside before US jobs data, following its rally after ECB provided liquidity to struggling euro zone banks.

Bond yields soared on Friday as the market turned nervous with the first auction of the government’s enhanced October-March borrowing getting devolved, reflecting the lack of appetite for sovereign paper.

India sold Rs 15,000 crore of bonds with the cut-off in two bonds well above market expectations. RBI said the 2017 and 2022 bonds were fully sold while the 2027 and 2040 bonds were only partially sold. PDs had to buy Rs 193 crore of the 2027 bonds while they had to purchase Rs 706 crore of the 2040 paper.