The rupee recovered against the US dollar on Thursday following the assurances of the Reserve Bank of India (RBI) Governor on Wednesday that the apex bank was in control of the situation in the foreign exchange market.
The value of Indian currency, which gained in early trades, waned later as the wholesale price index (WPI) rose to an eight-month high. However, traders said that the rupee regained after the intervention of the Central bank in the market.
The rupee closed at 63.11 a dollar compared to its previous close of 63.30 on Wednesday. It was traded in a range of 62.95 and 63.34.
Addressing an hurriedly-convened press conference on Wednesday, the RBI Governor Raghuram Rajan said that that there was no fundamental reason for volatility in the value of the rupee.
The yield of benchmark 10-year Government Securities (G-Sec) moved to 9.02 per cent, a 10 basis points rise from its previous level.
The statement of Janet Yellen, who has been proposed as the US Federal Reserve Chief, gave further comfort to markets as she indicated that tapering of US bond buying would not happen so soon as many market participants had expected.
“WPI inflation for October came, at 7 per cent, is in line with market estimates. However, the revision of August numbers to 6.99 per cent from 6.10 per cent may temporarily dampen the positive momentum created by RBI Governor’s speech yesterday,” said Nirakar Pradhan, Chief Investment Officer, Future Generali India Life Insurance Co Ltd.
Recent policy hikes
“The inflation data read with Governor’s speech suggest that the RBI would wait and watch the effects of recent policy hikes,” Dr. Pradhan added.
Meanwhile, the Bombay Stock Exchange (BSE) 30-share Sensitive Index (Sensex) gained 205.02 points or 1.02 per cent to close at 20,399.42. The broader 50-share Nifty of the National Stock Exchange (NSE) closed at 6056.15 with a gain of 66.55 points or 1.11 per cent.
“Market sentiment was better following the comments made by the RBI Governor. Expectations that Janet Yellen will also be more dovish in her approach buoyed sentiments,” said Dipen Shah, Head of Private Client Group Research, Kotak Securities.
