LM:Rupee weakens 0.55% as dollar gains on Bernanke comments
Mumbai: The Indian rupee weakened on Thursday, a day after US Federal Reserve chairman Ben Bernanke’s statement that the exit from monetary stimulus could happen later this year depending on US economic conditions.
The rupee closed at 59.68 per dollar, down 0.55% from the previous close of 59.35. The currency opened at 59.61 and touched a low of 59.79 in intra-day trading.
On Wednesday, Bernanke said the central bank’s asset purchases are by no means on a preset course as he sought to tamp down an increase in borrowing costs that threatens to slow US economic expansion.
“We’re going to be responding to the data,” Bernanke said to the house financial services committee. “If the data are stronger than we expect, we’ll move more quickly to reduce purchases. If data don’t meet the kinds of expectations we have about where the economy’s going, then we would delay that process or potentially increase purchases for a time.”
The US Fed’s moves will be critical to decide the course of the Indian rupee, besides other factors, dealers said. Since January this year, the rupee has weakened 7.7% and has lost the most among Asian currencies during that period.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 82.817, up 0.13% from the previous close of 82.708.
Bond yields which rose in the last two sessions, eased on Thursday.
The yield on India’s 10-year benchmark bond closed at 8.003%, down 0.52% from the previous close, after opening at 8.092%. Bond yields and prices move in the opposite direction.
India’s benchmark Sensex closed at 20,128.41, up 0.90% from the previous close on BSE, while the broader National Stock Exchange index Nifty ended at 6,038.05, up 1.08% from the previous close.
Call rates, at which banks lend overnight money to each other, eased compared with the previous sessions. The call money rate stood at 6.25% after touching a high of 8%. Call rates had touched a high of 9.25% in the previous sessions, mirroring the tight liquidity in the banking system.
The Reserve Bank of India (RBI) raised Rs.2,532 crore through the open market operation bond sale, against the targeted Rs.12,000 crore. The central bank received bids worth Rs.24,279 crore at the auction and rejected all bids for 8.07%, 2017 bonds as well as for 8.15%, 2022 bonds.
The RBI had received bids worth Rs.3,833 crore for the 2022 bonds and Rs.5,767 crore for the 2017 bonds.
