Rupee closes at 29-month high against US dollar

Mumbai: The Indian rupee on Tuesday strengthened for a fourth session to closed at an over 29-month high against the US dollar, tracking gains in the Asian currencies market.

The home currency ended at 63.48 a dollar—a level last seen on 17 July 2015, up 0.30% from its Monday’s close of 63.68. The rupee opened at 63.69 a dollar and touched a high of 63.44 in intraday.

“In the last few sessions rupee has been strengthening primarily on back of weakness in the dollar against its major crosses”, said Navneet Damani, vice president commodity research, Motilal Oswal Commodities.

Asian currencies were trading higher after the dollar Index decreased 0.4% to the lowest in 14 weeks.

Among the Asian currencies, Malaysian ringgit was up 0.67%, Singapore dollar 0.59%, South Korean won 0.5%, Thai baht 0.44%, China offshore 0.42%, Taiwan dollar 0.34%, Japanese yen 0.34%, Indonesian rupiah 0.30%, China renminbi 0.20%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 91.859, down 0.41%, from its previous close of 92.24.

“Better-than expected economic numbers also supporting the home currency”, Damani added.

On Monday, eight core sectors expanded at a fastest pace in more than a year at 6.8% in November 2017 on account of robust performance in segments like refinery, steel and cement. Manufacturing PMI for December rose to 54.7, highest level since August 2012, compared to 52.6 in the previous month.

In the year 2017, the rupee gained 6.35% and Sensex rose 28%, while foreign institutional investors have bought $7.73 billion and $23.27 billion in equity and debt, respectively.

The government will auction a new 10-year government security as part of its weekly auction, the Reserve Bank of India (RBI) notified on Monday.

“From a medium term perspective, we believe the bond yield trajectory will largely depend on fiscal policy and commodity prices, especially oil prices. The recent announcement of additional borrowing in the current quarter (Jan-March 2018; Q4 FY18) has added to uncertainty about the government’s fiscal deficit target for FY19 (April 2018-March 2019). Therefore, bond markets will be keenly watching the central budget for FY19 when it is announced at the beginning of February,” said Nomura Research in a note to its investors.

The 10-year bond yield ended at 7.386% compared to its previous close of 7.337%. Bond yields and prices move in opposite directions.

Local equity markets were fluctuating between gains and losses on concerns that the government may impose higher capital gains tax on stocks amid slow economic recovery. The benchmark Sensex fell 0.01%, or 0.49 points, to 33,812.26.