MUMBAI: The rupee is trading strong for a second straight session as the key benchmark stock index BSE Sensex shares gained more than 2% percent
despite choppy trade.
Gains in Asian indices also helped boost the sentiment for the local unit. At 2.30 pm, the rupee was at 50.09 against the dollar, off an early low of 50.45 and stronger than its Wednesday's close of 50.33.
The yen rose broadly on Thursday, climbing back towards a three-week high against the dollar with concerns about the banking sector re-emerging, prompting a move towards the safe haven currency. The Euro also edged up against the dollar after surveys showed the Euro zone's economy improved.
Bonds dropped for the first time in seven trading sessions with some traders choosing to sell securities ahead of an Rs 12,000 crore auction scheduled tomorrow. RBI will buy securities worth Rs 6,000 crores today.
Yields on benchmark notes due 2019 rose from a six-week low as the government prepares to sell more securities as a part of its record debt raising programme. The yield on the 6.05% note due February 2019 was 5 bps lower than Wednesday's close at 6.14% at 2.30 pm. It had risen to 6.24% earlier.
"Players are flush with liquidity and RBI's buy back stance is very encouraging," says Arvind Chari, fixed income portfolio manager at Quantum Mutual. "The central bank has further leeway with all the MSS bond buy backs that it has announced," he added.
The government will offer Rs 8,000 crores of the 6.05% bonds due 2019 and Rs 4,000 crore of the 7.5% notes maturing in 2034 at tomorrow’s auction, according to a RBI statement.
