Positive comments from the US Federal Reserve provided more strength to US dollar, which in turn resulted of further weakening of rupee. Rupee again fell in for the second consecutive session by 33 paisa and closed at 59.67 per dollar. Effectively, rupee is again back to the level, where RBI had introduced multiple measures to restrict its weakness.
On Thursday, rupee opened weak at 59.61 per dollar as compared to 59.34 per dollar closing on Wednesday. Through the session it made a high of 59.49 per dollar and then fell to 59.79. The biggest reason for the recent fall was the strength dollar gained as dollar index rose 0.16 per cent against its major rivals as US Federal Reserve Chairman Ben Bernanke reiterated that changes to the central bank’s bond-buying program would be data dependant.
As per experts, there was an increase in dollar demand from importers, mainly oil refiners and some banks.
RBI had planned to auction Rs 12,000 crore bonds but till now it has managed bids for Rs 2,532 crore worth bonds which is only a fifth of the total target. The sale was one of the steps taken to reduce volatility in the exchange rate. RBI, which announced measures on Monday evening to address exchange rate volatility by curbing liquidity, yesterday said it would conduct a special 3-day repo at an interest rate of 10.25 per cent for Rs 25,000 crore to allow banks to meet the requirements of mutual funds.
“The trading range for the spot USD/INR pair is expected to be within 59.20 to 60.00,” said Pramit Brahmbhatt, CEO, Alpari Financial Services (India). Forward dollar premiums moved down on sustained receipts by exporters. The benchmark six-month forward dollar premium payable in December ended down at 197-1/2-202-1/2 paise from Wednesday’s close of 200-210 paise. Far-forward contracts maturing in June declined to 399-404 paise from 403-413 paise.
The RBI fixed the reference rate for the dollar at 59.7120 and for the euro at 78.2195. The rupee remained weak against the pound sterling, falling to 90.75 from the previous close of 90.35, and dropped against the euro to 78.18 from 78.00.It was slightly lower against the Japanese yen at 59.61 per 100 yen from 59.54.
Meanwhile, Sensex reclaimed the 20,000-mark with a 180-point boost on hopes of continued earnings momentum amid assurances by US Fed about maintaining its stimulus programme. The BSE index finally settled at 20,128.41 gaining 179.68 points while Nifty climbed 64.75 points to end at 6,038.05, a six-week high.Bluechips including HDFC Bank, ONGC, Infosys, l&T, Bharti Airtel, HDFC, ICICI Bank and SBI together added almost 150 points to the key index’s gains.