Mumbai: The rupee recovered some of its losses against the dollar on persistent sales of the US currency by exporters and companies, expecting the rupee to rise further.
The Indian currency had weakened to a low of 62.60 per dollar following the Reserve Bank of India’s (RBI) decision to raise its repo rate or the rate at which it lends to banks by 25 basis points (bps) to 7.5%.
Traders bought dollars on expectation that a higher benchmark rate will drive up borrowing costs further and slow economic recovery.
However, dollar sales from exporters and companies helped the rupee recover most of its losses.
“Initially the sales were from nationalized banks, but private sector banks also joined in..,” said a dealer with a private bank. “The recovery in the rupee was sharp with 62.10 per dollar being traded at one point from 61.19 per dollar in a few seconds.”
The rupee closed at 62.2775 per dollar, down 0.81% from the previous close of 61.7750. It open at 62.0450 and touched a high and a low of 61.8850 and 62.6025 per dollar, respectively.
A recovery in the local stock market also helped the rupee. India’s benchmark Sensex ended at 20,263.71, down 1.85%, or 382.93 points, from the previous close.
Since January this year, the rupee has weakened 11.69% and has lost the second most after Japanese Yen among Asian currencies during that period.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 80.359, down 0.02% from the previous close of 80.372.
“I expect the rupee to trade in the broad 61.50 per dollar to 64 per dollar band in the short term,” said this dealer from the private sector bank.
The yield on the 10-year bond ended at 8.559%, up 4.47% from the previous close of 8.193%. It opened at 8.211% and touched a high and a low of 8.568% and 8.190%, respectively.
The India call money rate ended at 9%, down 11.76%, from its previous close of 10.20%. It opened at 10.38 and touched a high and a low of 10.38% and 6.5%, respectively.
