The rupee erased its initial gains and was trading weak by 14 paise at 62.50 against the dollar at 4.38 p.m. local time on fresh bouts of dollar demand from banks and importers.
The rupee opened a tad strong at 62.30 per dollar against the previous close of 62.36 on initial selling of dollar by banks and exporters in view of persistent capital inflows from foreign funds.
However, it failed to maintain its early gains and was trading weak at 62.57 per dollar.
The domestic unit hovered in the range of 62.25 and 62.57 during the late morning deals.
Forex dealers said the dollar’s weakness against other overseas currencies, after US Federal Reserve chief Ben Bernanke indicated that the bank’s stimulus programme would remain in place until the economy is back on track, also supported the rupee.
However, a lower opening in the equity market capped the rupee’s gain, they said.
Reserve Bank of India Governor Raghuram Rajan had recently said that most of the dollar demand of oil companies is being routed back through the forex market instead of the special swap window opened after the rupee slumped to its life-time low in late August.
Yuan trading band
Also, China’s central bank chief’s comments that the country will gradually expand the yuan trading band to help make the currency more flexible and market-driven, boosted the Asian markets thereby helping the rupee, dealers said.
Call rates, G-secs
The overnight call money rate, the rate at which banks borrow short-term funds from each other, opened down at 8.7 per cent against the previous close of 8.80 per cent.
Yield on the 10-year benchmark government security, 7.16 per cent maturing in 2023, hardened a tad to 9.02 against the previous close of 9 per cent.
Yield on the widely traded 8.28 per cent security, maturing in 2027, hardened to 9.01 against the previous close of 8.99 per cent.
Finance Minister P. Chidamabaram said: “The interest rate in G-Secs has risen temporarily, but we hope that some measures the RBI will take and the next set of inflation figures that come…it would moderate and the yields on G-Secs will come down.”
