MUMBAI: The rupee traded at 48.95 against the dollar at 1 pm on Tuesday, stronger than Monday’s close of 49.08 with stocks taking a beating. This is the first time in three days that the local unit is rising in the hope that global funds will look to investing in Asian assets again.
The dollar index - gauge of the dollar’s movement against six major currencies - was up 0.1% by l1 pm. Traders were becoming wary of optimism about the global economy's recovery, rushing towards safe haven currencies like the dollar. But there seems to temporary trend reversal data after Japan too yesterday said its economy, Asia’s biggest, is “picking up.”
"Post budget, there has been a definite move away from Asian equities and currencies," says Rugved Dhumale, senior vice president at Mecklai Financial. "Anyways the rupee was overbought. We expect one round of weakening in the currency before its starts strengthening again," he added. The rupee has rebounded from its weakest level in almost two months of 49.40 reached yesterday.
Government bonds continued to trade strong on Tuesday after the central bank said it will auction only Rs 12,000 cr worth gilts this week, as against Rs 15,000 cr it has been is-suing until last week. Traders seem to be enthused by the ten-year paper taking centre-stage from Monday and say this paper will continue to remain in the spot-light in the coming months.
The yield on the new benchmark ten year bond traded at 6.80 largely unchanged from its Monday close.
